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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 1, 1998
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OHIO CASUALTY CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 0-5544 31-0783294
- ---------------------------- ----------- -------------------
(State or other jurisdiction Commission (IRS Employer
of incorporation) File Number Identification No.)
136 North Third Street, Hamilton, Ohio 45025
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(Address or principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (513) 867-3000
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index - Page 15
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
OVERVIEW
On December 1, 1998 (the "Closing Date"), The Ohio Casualty Insurance
Company ("OCIC"), a wholly owned subsidiary of Ohio Casualty Corporation (the
"Company"), acquired from Great American Insurance Company ("GAIC"), a
subsidiary of American Financial Group, Inc. ("AFG"), and certain other
insurance company affiliates of AFG (together with GAIC, the "Sellers"),
substantially all of the assets relating to Sellers' commercial lines
insurance division (the "Division"), including, with some exceptions, the
insurance policies issued by Sellers through the Division (the "Acquisition").
In consideration for the acquired assets, OCIC assumed net liabilities of
Sellers relating to the Division in an aggregate amount of $300 million,
including, with certain exceptions, Sellers' liabilities under the acquired
insurance policies.
Sellers are entitled to receive from OCIC up to an additional $40
million (the "Additional Consideration") based on the retention and growth of
the insurance business acquired by OCIC. The amount of the Additional
Consideration will be based on the gross premiums represented by renewals of
the acquired policies and certain new policies written for OCIC and its
affiliates by insurance agents who represented the Division prior to the
Closing over a period of 18 months following the Closing Date. The formula
for determining the amount of the Additional Consideration, if any, payable to
AFG is set forth in Schedule 2.2.1.2 of the Asset Purchase Agreement (as
defined below).
As additional consideration for the acquired assets, the Company issued
to GAIC a warrant (the "Warrant") to purchase up to 3,000,000 common shares of
the Company for a purchase price of $45.01 per share. The Warrant first
becomes exercisable on December 1, 1999 (subject to acceleration in the event
of certain change of control transactions), and expires on December 1, 2003.
The Warrant Agreement and related Warrant are included as Exhibit 2(d) to this
Form 8-K.
The terms and conditions of the Acquisition are set forth in an Asset
Purchase Agreement ("Asset Purchase Agreement"), dated as of September 14,
1998, among OCIC and Sellers, which was filed as an exhibit to the Company's
Quarterly Report on Form 10-Q dated November 13, 1998. The Asset Purchase
Agreement was amended by the parties on December 1, 1998, pursuant to an
Amendment No. 1 to Asset Purchase Agreement. Amendment No. 1 to the Asset
Purchase Agreement is included as Exhibit 2(b) to this Form 8-K.
Certain ancillary agreements relating to the Acquisition are included
as exhibits to this Current Report on Form 8-K. The description of the
Acquisition in this Form 8-K is qualified in its entirety by reference to the
Asset Purchase
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Agreement, as amended, and such ancillary agreements (together,
the "Transaction Documents").
TRANSACTION DOCUMENTS
ASSET PURCHASE AGREEMENT. Pursuant to the terms of the Asset Purchase
Agreement, on the Closing Date, OCIC assumed net liabilities of Sellers in the
amount of $300 million. In addition, Sellers transferred to OCIC certain
investment securities having an agreed value equal to the difference between
(i) the total liabilities of Sellers assumed by OCIC on the Closing Date and
(ii) the sum of $300 million and the book value of the assets acquired by OCIC
from Sellers, including accounts receivable and tangible assets. For purposes
of the Closing Date transactions, the transferred liabilities and the
transferred assets were determined as of June 30, 1998. Following the Closing
Date, Sellers and OCIC will prepare a statement of transferred liabilities and
transferred assets as of the Closing Date, and the parties will make such
additional transfers as may be necessary to reflect changes occurring in the
transferred liabilities and transferred assets between June 30, 1998, and the
Closing Date.
REINSURANCE AGREEMENT. Pursuant to a Reinsurance Agreement dated the
Closing Date (the "Reinsurance Agreement"), OCIC acquired, subject to the
terms of the Reinsurance Agreement, the rights and liabilities of Sellers
under commercial lines policies written through the Division. Each of the
transferred insurance policies were reinsured on a 100% quota share indemnity
reinsurance basis to OCIC. The Reinsurance Agreement provides that OCIC will
have the sole and exclusive right to renew any and all of the insurance
policies transferred by Sellers to OCIC. The Reinsurance Agreement also
provides that OCIC's obligation for certain extra contractual obligations
arising from any of the reinsured insurance policies and incurred prior to
December 1, 1998, is limited on any individual loss, or any series of losses
attributable to the same or related cause, to $10 million. The Reinsurance
Agreement is included as Exhibit 2(c) to this Form 8-K.
NONCOMPETITION AND REFERRAL AGREEMENT. On the Closing Date, the
Company, OCIC and AFG entered into a Noncompetition and Referral Agreement
(the "Noncompetition Agreement") having a five-year term which, with certain
exceptions, prohibits Sellers and their affiliates from selling commercial
insurance products of the type sold by the Division prior to the Closing
through the insurance agents and brokers who produced the commercial lines
insurance policies assumed by OCIC (the "Commercial Lines Agents"). The
Noncompetition Agreement prohibits OCIC and its affiliates from selling
through Commercial Lines Agents certain types of specialty insurance products
marketed and sold by AFG insurance company affiliates. The Noncompetition
Agreement also generally prohibits OCIC and its affiliates from offering and
selling through Commercial Lines Agents personal lines insurance products and
certain commercial lines insurance coverages that are offered as part of
specialty package insurance policies by AFG's specialty
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insurance operations, although in certain cases OCIC and its affiliates may
provide such coverages but they are required to make payments to AFG in
connection with providing such coverage. OCIC also agreed to allow AFG to
offer its specialty and nonstandard automobile insurance products through
the independent agency force of OCIC and its insurance company affiliates
(the "OCG Group") in exchange for a referral fee to OCIC. The Noncompetition
and Referral Agreement is included as Exhibit 2(e) to this Form 8-K.
INFORMATION SYSTEMS AGREEMENT AND RELATED AGREEMENTS. OCIC and the
Sellers entered into an Information Systems Agreement dated December 1, 1998,
pursuant to which Sellers have agreed to provide to OCIC for a period of at
least two years the computer processing and communication services necessary
for operation of the Division. OCIC will pay to Sellers for such services a
fee intended to reimburse Sellers for the costs and expenses incurred by them
in connection with the performance of such services. Sellers have agreed that
their computer systems which are used to provide such computer processing
services to OCIC will be Year 2000 compliant prior to August 31, 1999. OCIC
and GAIC also have entered into a Database License Agreement, dated December
1, 1998, whereby GAIC has granted to OCIC a perpetual, royalty-free license to
use all records, data, files, reports, forms and other data of Sellers
relating to the Division and necessary in the conduct of the business acquired
by OCIC, and a Software License Agreement, dated December 1, 1998, whereby
GAIC has granted to OCIC a perpetual, non-exclusive license to use in its
operations certain computer software programs owned by Seller and used and
necessary in the conduct of the business acquired by OCIC on computer
processing systems maintained and operated by OCIC. The Information Systems
Agreement, Database License Agreement and Software License Agreement described
in this paragraph are included as Exhibits 2(f), 2(h) and 2(i), respectively,
to this Form 8-K.
Pursuant to an Investment Services Agreement, dated December 1, 1998,
between OCIC and American Money Management Corporation ("American"), an
affiliate of AFG, OCIC has agreed to retain American for a period of five
years to manage approximately $500 million of OCIC's portfolio of fixed income
securities in accordance with investment policies and guidelines established
from time to time by the Board of Directors of OCIC and to provide other
investment advisory services. The Investment Services Agreement is included
as Exhibit 2(g) to this Form 8-K.
ITEM 5. OTHER EVENTS.
Item 5 of this Current Report on Form 8-K is being filed for the
purpose of providing an updated summary of the material attributes of the
common shares, par value $.125 per share (the "Common Shares") of the Company.
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The following statements are subject to and qualified in their entirety
by reference to detailed provisions of the Amended Articles of Incorporation,
as amended (the "Articles") and Code of Regulations, as amended (the
"Regulations") of the Company (copies of which are included as Exhibits to
this Current Report on Form 8-K).
OVERVIEW. The Company's Articles currently authorize the Company to
issue 150,000,000 Common Shares. As of the date of this report, the Company
had 31,268,783 Common Shares issued and outstanding, all of which are fully
paid and nonassessable. The Company's Common Shares are traded on The Nasdaq
National Market under the symbol "OCAS". The transfer agent and registrar for
the Common Shares is First Chicago Trust Company of New York.
The Company's Common Shares are subject to the express terms of the
preferred shares, without par value, of the Company (the "Preferred Shares")
and any series of the Preferred Shares. The Company's Articles currently
authorize the Company to issue 2,000,000 Preferred Shares. As of the date of
this report, the Company had no Preferred Shares issued and outstanding.
Subject to the provisions of the Articles, the Preferred Shares may be issued,
from time to time, in one or more series, with such designations, preferences
and other rights and qualifications as may be contained in the resolutions of
the Board of Directors of the Company providing for their issuance. Each
Preferred Share is entitled to one vote per share. The Board of Directors
cannot alter the voting rights of the Preferred Shares.
VOTING RIGHTS. Subject to contrary provisions of law or the Company's
Articles, each Common Share is equal to every other Common Share and entitles
its holder to one vote on all matters properly presented to the shareholders
for their vote. The Regulations provide for the election of directors by a
plurality vote of the shareholders. Shareholders do not have cumulative
voting rights in the election of directors. All other actions submitted to
the shareholders may be taken by the vote, consent, waiver or release of the
holders of a majority of the voting shares of the Company, except as otherwise
expressly provided by law and except as set forth in the Company's Articles
for certain actions which have not received the prior approval of two-thirds
of the directors of the Company and in the case of certain business
combinations. The supermajority and business combination provisions are
described below under the heading "Anti-Takeover Provisions". Subject to
contrary provisions of law or the Company's Articles, the Common Shares are
voted together with the Preferred Shares as a single class.
DIVIDENDS. Subject to any rights to receive dividends or distributions
of the holders of Preferred Shares, holders of Common Shares are entitled to
receive cash dividends pro rata on a per share basis if and when such
dividends are declared by the Board of Directors of the Company from funds
legally available for such
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dividends. The Company is dependent on dividend payments from its insurance
subsidiaries in order to meet operating expenses and to pay dividends. State
insurance laws impose various restrictions on the payment of dividends by
insurance companies and require prior approval by the state insurance
department if the dividend exceeds certain specified amounts.
RESTRICTIONS ON TRANSFER. Neither the Articles nor the Regulations
contain any restrictions on transfer of the Common Shares.
PREEMPTION, REDEMPTION, CONVERSION, REPURCHASE AND SINKING FUND
PROVISIONS. Holders of Common Shares do not have any preemptive rights to
subscribe for or purchase any additional securities issued by the Company,
except such rights as the Board of Directors may determine. No redemption,
conversion, repurchase or sinking fund provisions are associated with the
Common Shares.
LIQUIDATION. Holders of Common Shares share with each other on a
ratable basis as a single class in the net assets of the Company available for
distribution in respect of the Common Shares in the event of liquidation.
ANTI-TAKEOVER PROVISIONS
ARTICLES AND REGULATIONS. The Company's Articles and Regulations
contain certain provisions that may have anti-takeover effects on the Company.
The Articles provide for:
(1) the elimination of cumulative voting in the election of directors;
(2) the approval of the holders of at least 80% of the outstanding
Common Shares to authorize certain business combinations involving the Company
and a holder of 20% or more of the voting power of the Company (including any
outstanding Preferred Shares) or any affiliate or associate of such a holder,
unless:
(i) the business combination results in an involuntary sale,
redemption, cancellation or other termination of ownership
of all Common Shares owned by shareholders who do not vote
in favor of, or consent in writing to, the business
combination and the cash or fair value of other readily
marketable consideration to be received by such shareholders
for such shares is at least equal to a minimum price per
share (as defined in the Articles); and
(ii) a proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 is mailed to the shareholders
of the Company for the purpose of
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soliciting shareholder approval of the proposed business
combination; and
(3) the approval of the holders of at least 80% of the voting power of
the Company (including any outstanding Preferred Shares) to authorize the
following corporate transactions, unless the matter has been previously
approved by a vote of two-thirds of the directors:
(i) an amendment to the Articles or the adoption
of new Articles;
(ii) proposed new Regulations, or an alteration,
amendment or repeal of the existing Regulations;
(iii) an agreement of merger or consolidation providing
for the merger or consolidation of the Company
with or into one or more other corporations;
(iv) a proposed combination or majority share
acquisition involving the issuance of shares of
the Company and requiring shareholder approval;
(v) a proposal to sell, lease or exchange all or
substantially all of the property and assets
of the Company;
(vi) a proposed dissolution of the Company; or
(vii) a proposal to fix or change the number of
directors by action of the shareholders of
the Company.
In addition, the Regulations of the Company provide for:
(1) a classified Board of Directors divided into three classes each
with a term of three years;
(2) the approval of at least 80% of the voting power of the Company to
remove directors with or without cause;
(3) special advance notice requirements to nominate directors; and
(4) the approval of the holders of at least 50% of the voting power of
the Company to call a special meeting of shareholders.
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The availability of the Preferred Shares might also be considered as
having the effect of discouraging an attempt by another person or entity,
through the acquisition of a substantial number of the Company's Common
Shares, to acquire control of the Company with a view to effecting a merger,
sale of the Company's assets or similar transaction, since the issuance of
Preferred Shares could be used to dilute the share ownership or voting rights
of a person or entity seeking to obtain control of the Company. Additionally,
certain companies have issued, as a dividend to holders of their Common
Shares, preferred shares having terms designed to discourage third parties
from acquiring control of such companies, and the Preferred Shares might be
available for such purpose.
AMENDED AND RESTATED RIGHTS AGREEMENT. The Company also has adopted
an Amended and Restated Rights Agreement (the "Rights Agreement"), pursuant to
which the holders of Common Shares hold rights to purchase in certain cases
additional Common Shares at a price of $250.00 per share. Each outstanding
Common Share is accompanied by one-half of a purchase right. Under certain
circumstances, including the acquisition by a person of 20% or more of the
Company's outstanding Common Shares (without the prior approval of the
directors of the Company), all rights holders, except the acquiror, may
purchase Common Shares of the Company having a value of twice the exercise
price of the rights, subject to adjustment as provided in the Rights
Agreement. If the Company is acquired in a merger or other business
combination after the acquisition of 20% of the Company's outstanding Common
Shares (without prior approval of the directors), in certain cases rights
holders may purchase the acquiror's shares at a similar discount.
OHIO'S ANTI-TAKEOVER LAWS. As an Ohio corporation, the Company is
subject to the provisions of Section 1701.831 of the Ohio Revised Code (the
"Ohio Control Share Acquisition Statute"). The Ohio Control Share Acquisition
Statute requires shareholder approval of any proposed "control share
acquisition" of the Company. A "control share acquisition" is the
acquisition, directly or indirectly, by any person (including any individual,
partnership, corporation or other entity or two or more persons having a joint
or common interest) of shares of a corporation that, when added to all of the
shares of the corporation that may be voted, directly or indirectly, by the
acquiring person, would entitle such person to exercise or direct the exercise
of the voting power of the corporation in the election of directors within any
of the following ranges: one-fifth or more, but less than one-third of such
voting power; one-third or more but less than a majority of such voting power;
a majority or more of such voting power.
The control share acquisition must be approved in advance by the
holders of at least a majority of the voting power of the Company in the
election of directors represented at a meeting at which a quorum is present
and by the holders of a majority of such voting power remaining after
excluding the voting shares owned by
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the acquiring shareholder and certain "interested shares," including shares
owned by officers elected or appointed by the directors of the Company and by
directors of the Company who are also employees of the Company. "Interested
shares" also include those shares acquired by a person or group between the
date of the first disclosure of a proposed control share acquisition or
change-in-control transaction and the record date established for voting
privileges at the special meeting of shareholders held pursuant to the Ohio
Control Share Acquisition Statute. The Company shares acquired during that
period by a person or group will be deemed "interested shares" only if (i)
the amount paid for the Company shares by such person or group exceeds
$250,000 or (ii) the number of shares acquired by such person or group
exceeds one-half of 1% of the outstanding Company voting shares. Shares
acquired for valuable consideration after the record date established for
voting rights, but accompanied by a transfer of voting power in the form of
a blank proxy or other voting agreement will also be deemed "interested
shares".
The Company also is subject to Chapter 1704 of the Ohio Revised Code
(the "Ohio Merger Moratorium Statute") which prohibits certain business
combinations and transactions between the Company and a beneficial owner of
the Company's shares representing 10% or more of the voting power of the
Company (an "Interested Shareholder") for at least three years after the
Interested Shareholder becomes such, unless the Board of Directors of the
Company approves either (i) the transaction; or (ii) the acquisition of the
Company's shares that resulted in the person becoming an "Interested
Shareholder", in each case before the Interested Shareholder became such.
Examples of transactions regulated by the Ohio Merger Moratorium
Statute include asset sales, mergers, consolidations, loans, voluntary
dissolutions and share transfers involving an Interested Shareholder
("Moratorium Transactions"). After the three-year period, a Moratorium
Transaction may take place provided that certain conditions are satisfied,
including that (i) the Board of Directors approves the transaction, (ii) the
transaction is approved by the holders of shares with at least two-thirds of
the voting power of the Company (or a different proportion set forth in the
Articles) including a majority of the outstanding shares after excluding the
Company shares controlled by the Interested Shareholder, or (iii) the business
combination results in shareholders, other than the Interested Shareholder,
receiving a "fair price" plus interest for their shares.
Similar transactions also may be subject to Ohio's insurance laws and
regulations which subject transactions between affiliates in an insurance
holding company system to review and prior approval by the Superintendent of
Insurance. For purposes of this statute, affiliates include persons owning or
controlling more than ten percent of the voting securities of a company within
the insurance holding company system. Regulated transactions between insurers
and their affiliates include sales, purchases, exchanges of assets, loans,
extensions of credit, guarantees and certain investments.
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The Company is subject to Ohio's tender offer statute which provides
that an offeror may not make a tender offer or request or invitation for
tenders that would result in the offeror beneficially owning more than ten
percent of any class of any target company's equity securities (a "control
bid") unless such offeror files certain information with the Ohio Division of
Securities and provides such information to such target company and the
offerees within Ohio. The Ohio Division of Securities may suspend the
continuation of the control bid if it determines that the offeror's filed
information does not provide full disclosure to the offerees of all material
information concerning the control bid. The statute also provides that an
offeror may not acquire any equity security of a target company within two
years of the offeror's previous acquisition of any equity security of the same
target company pursuant to a control bid unless the Ohio offerees may sell
such security to the offeror on substantially the same terms as provided by
the previous control bid. Under these provisions, if the offeror or subject
company is an insurance company subject to Ohio insurance law, then the
Superintendent of Insurance replaces the Ohio Division of Securities for all
purposes under the tender offer statute.
In addition, the Company is subject to state statutes and regulations
that govern the acquisition of control of insurance holding companies which
own or control insurance companies domiciled in such states. Under these
provisions, an offeror must receive prior approval by the Superintendent of
Insurance for any transaction, whether it be a tender offer, a request for
tender offers, an agreement to exchange securities, the acquisition of stock
on the open market, a merger, or any other transaction, that results in the
offeror acquiring control of the Company. Control is presumed where the
transaction results in the offeror owning or controlling more than ten percent
of the voting securities of the Company; however, a finding of control can be
made where the offeror owns or controls a lesser amount of the voting
securities. To receive approval of the transaction, the offeror must submit
information to the Superintendent of Insurance and the Company. The
Superintendent of Insurance will then approve of the transaction unless it
finds that the result would hinder the Company's ability to meet its
obligations, would result in less competition or a monopoly, or would
otherwise not be in the public's best interest or against public policy.
Additionally, the Superintendent of Insurance will consider the financial
condition, competence and experience of the offeror as well as the offeror's
plans for the Company in relation to the public's best interests.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired
As of the date of filing of this Current Report on Form 8-K, the
financial statements required by this Item 7(a) in connection with the
transactions described in Item 2 of this report are not presently available.
In accordance with Item 7(a)(4) of Form 8-K, such financial statements will be
filed by amendment under cover of Form 8-K/A no later than February 15, 1999.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, the pro
forma financial information for the transactions described in Item 2 of this
report which is required by this Item 7(b) is not presently available. In
accordance with Item 7(b)(2) of Form 8-K, such pro forma financial information
will be filed by amendment under cover of Form 8-K/A no later than February
15, 1999.
(c) Exhibits
(1) The following documents related to the transactions
described in Item 2 of this Current Report on Form 8-K are being filed as
exhibits to this report:
Exhibit Number Description
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2(a)* Asset Purchase Agreement, dated as of
September 14, 1998, among The Ohio
Casualty Insurance Company, Great
American Insurance Company and the
other Sellers named therein
2(b) Amendment No. 1 to Asset Purchase
Agreement, dated December 1, 1998,
among The Ohio Casualty Insurance
Company, Great American Insurance
Company and the other Sellers named
therein
2(c) Reinsurance Agreement, dated December
1, 1998, among The Ohio Casualty
Insurance Company, Great American
Insurance Company and the other
Companies named therein
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Exhibit Number Description
-------------- -----------
2(d) Warrant Agreement, dated December 1,
1998, between Ohio Casualty Corporation
and Great American Insurance Company
and Warrant dated December 1, 1998
2(e) Noncompetition and Referral Agreement,
dated December 1, 1998, among Ohio
Casualty Corporation, The Ohio Casualty
Insurance Company and American
Financial Group, Inc.
2(f) Information Systems Agreement, dated
December 1, 1998, among The Ohio
Casualty Insurance Company, Great
American Insurance Company and the
other Sellers named therein
2(g) Investment Services Agreement, dated
December 1, 1998, between The Ohio
Casualty Insurance Company and
American Money Management Corporation
2(h) Software License Agreement, dated
December 1, 1998, between The Ohio
Casualty Insurance Company and Great
American Insurance Company
2(i) Database License Agreement, dated
December 1, 1998, between The Ohio
Casualty Insurance Company and Great
American Insurance Company
*Certain of the Schedules and Exhibits to the Asset Purchase Agreement, as
amended, have not been filed with this Current Report on Form 8-K because the
Company believes they do not contain information material to an investment
decision and which is not otherwise disclosed in the Asset Purchase Agreement
and the other agreements filed as exhibits to this report. The omitted
Schedules and Exhibits are described in the Asset Purchase Agreement. The
Company hereby agrees to furnish supplementally a copy of any omitted Schedule
or Exhibit to the Securities and Exchange Commission upon its request
therefor.
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(2) The following documents, which are referred to in Item 5
of this Current Report on Form 8-K, are being filed as exhibits to this
report:
Exhibit Number Description
-------------- -----------
4(a) Certificate of Amended Articles of
Incorporation of Ohio Casualty
Corporation as filed with the Ohio
Secretary of State on May 25, 1983
4(b) Certificate of Amendments to the
Articles of Incorporation of Ohio
Casualty Corporation as filed with
the Ohio Secretary of State on
November 21, 1986
4(c) Certificate of Amendment to Amended
Articles of Incorporation of Ohio
Casualty Corporation as filed with
the Ohio Secretary of State on April
29, 1992
4(d) Certificate of Amendment to Amended
Articles of Incorporation of Ohio
Casualty Corporation as filed with
the Ohio Secretary of State on April
30, 1996
4(e) Amended Articles of Incorporation of
Ohio Casualty Corporation (reflecting
amendments through April 30, 1996)
[for SEC reporting compliance purposes
only--not filed with the Ohio Secretary
of State]
4(f) Code of Regulations of Ohio Casualty
Corporation
4(g) Amended and Restated Rights Agreement,
dated as of February 19, 1998, between
Ohio Casualty Corporation and First
Chicago Trust Company of New York, as
Rights Agent
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
OHIO CASUALTY CORPORATION
By: /s/ Lauren N. Patch
-------------------------
Lauren N. Patch, President
and Chief Executive Officer
Dated: December , 1998
---
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EXHIBIT INDEX
Current Report on Form 8-K
Dated December 14, 1998
Ohio Casualty Corporation
Exhibit
No. Description Page
- ------- ----------- ----
2(a) Asset Purchase Agreement, dated as of Incorporated herein
September 14, 1998, among The Ohio by reference to
Casualty Insurance Company, Great Exhibit 2 to
American Insurance Company and the Registrant's Report
other Sellers named therein on Form 10-Q
dated November 13,
1998, for the
quarter ended
September 30, 1998
2(b) Amendment No. 1 to Asset Purchase 18
Agreement, dated December 1, 1998, among
The Ohio Casualty Insurance Company,
Great American Insurance Company and the
other Sellers named therein
2(c) Reinsurance Agreement, dated December 1, 26
1998, among The Ohio Casualty Insurance
Company, Great American Insurance
Company and the other Companies named
therein
2(d) Warrant Agreement, dated December 1, 40
1998, between Ohio Casualty Corporation
and Great American Insurance Company
and Warrant dated December 1, 1998
2(e) Noncompetition and Referral Agreement, 62
dated December 1, 1998, among Ohio
Casualty Corporation, The Ohio Casualty
Insurance Company and American Financial
Group, Inc.
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Exhibit
No. Description Page
- ------- ----------- ----
2(f) Information Systems Agreement, dated 75
December 1, 1998, among The Ohio Casualty
Insurance Company, Great American
Insurance Company and the other Sellers
named therein
2(g) Investment Services Agreement, dated 106
December 1, 1998, between The Ohio
Casualty Insurance Company and American
Money Management Corporation
2(h) Software License Agreement, dated December 113
1, 1998, between The Ohio Casualty
Insurance Company and Great American
Insurance Company
2(i) Database License Agreement, dated 122
December 1, 1998, between The Ohio
Casualty Insurance Company and Great
American Insurance Company
4(a) Certificate of Amended Articles of 129
Incorporation of Ohio Casualty Corporation
as filed with the Ohio Secretary of State on
May 25, 1983
4(b) Certificate of Amendments to the Articles of 137
Incorporation of Ohio Casualty Corporation
as filed with the Ohio Secretary of State on
November 21, 1986
4(c) Certificate of Amendment to Amended 140
Articles of Incorporation of Ohio Casualty
Corporation as filed with the Ohio Secretary
of State on April 29, 1992
4(d) Certificate of Amendment to Amended 144
Articles of Incorporation of Ohio Casualty
Corporation as filed with the Ohio Secretary
of State on April 30, 1996
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Exhibit
No. Description Page
- ------- ----------- ----
4(e) Amended Articles of Incorporation of 147
Ohio Casualty Corporation (reflecting
amendments through April 30, 1996)
[for SEC reporting compliance purposes
only--not filed with the Ohio Secretary
of State]
4(f) Code of Regulations of Ohio Casualty 157
Corporation
4(g) Amended and Restated Rights Agreement, Incorporated herein
dated as of February 19, 1998, between by reference to
Ohio Casualty Corporation and First Registrant's Form
Chicago Trust Company of New York, 8-A/A Amendment
as Rights Agent No. 3 dated March
5, 1998, and filed
March 6, 1998, with
the SEC [Exhibit 4]
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Exhibit 2(b)
Amendment No. 1 to Asset Purchase Agreement,
dated December 1, 1998, among The Ohio Casualty Insurance Company,
Great American Insurance Company and the other Sellers named therein
18
<PAGE> 19
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
-------------------------------------------
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT ("Amendment") is made
as of the 1st day of December, 1998 by and among GREAT AMERICAN INSURANCE
COMPANY, AMERICAN NATIONAL FIRE INSURANCE COMPANY, AGRICULTURAL EXCESS AND
SURPLUS INSURANCE COMPANY, AGRICULTURAL INSURANCE COMPANY, AMERICAN ALLIANCE
INSURANCE COMPANY, AMERICAN DYNASTY SURPLUS LINES INSURANCE COMPANY, AMERICAN
SPIRIT INSURANCE COMPANY, CONTEMPORARY AMERICAN INSURANCE COMPANY, EAGLE
AMERICAN INSURANCE COMPANY, EDEN PARK INSURANCE COMPANY, GREAT TEXAS COUNTY
MUTUAL INSURANCE COMPANY, GREAT AMERICAN LLOYD'S INSURANCE COMPANY AND SEVEN
HILLS INSURANCE COMPANY (collectively, "Sellers") and THE OHIO CASUALTY
-------
INSURANCE COMPANY ("Purchaser").
---------
RECITALS:
--------
WHEREAS, Purchaser and Sellers are parties to an Asset Purchase
Agreement dated as of September 14, 1998 (the "Agreement");
WHEREAS, in connection with the closing of the transaction contemplated
by the Agreement, the parties have agreed that the Database shall be retained
by the Sellers and certain Tangible Assets shall be leased and/or subleased to
Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained hereinafter, the parties do hereby agree as follows:
1. Capitalized Terms. Capitalized terms used herein without
-----------------
specific definition shall have the meanings respectively ascribed thereto in
the Agreement.
2. Definitions. The definitions "Books and Records" and "Excluded
----------- ----------------- --------
Assets" are hereby deleted in their entirety and replaced as set forth below,
- ------
and the definition of "Database" is hereby added as set forth below:
--------
"Books and Records" means the originals or copies of all
-----------------
records (including computer generated, recorded or stored
records) relating primarily to the Business, including customer
lists, policy information, Insurance Contract forms, claim
records, sales records, underwriting records, financial
records, tax records, personnel records related to Transferred
Employees and compliance records in the possession or control
of each of the Sellers or any of their respective Affiliates
and relating primarily to the operation of the Business.
19
<PAGE> 20
"Database" means the records, data, files, input materials,
--------
reports, forms and other data related to the Owned Software
disclosed on Schedule 3.13 and referenced in Section 3.17.
"Excluded Assets" shall mean any claims related to the matters
---------------
at issue in the Excluded Litigation, any Tax related assets
(including deposits for current Taxes) and recoveries on
insurance policies that do not relate to Transferred Assets,
Transferred Liabilities or Intellectual Property not
specifically transferred to Purchaser and the Database.
3. Licensed Software. Section 3.13.3 of the Agreement is hereby
-----------------
deleted in its entirety and replaced with the following:
3.13.3. On or after the Closing Date, Sellers and Purchaser
shall mutually identify the Licensed Software for which Sellers
shall endeavor to obtain necessary consents, approvals,
assignments, licenses or sublicenses for the use of such
Software by Purchaser on Purchaser's computer processing system
(the "Required Consents"). After the Closing Date, Sellers
shall at Purchaser's request, use their reasonable best efforts
to obtain, at Purchaser's sole cost and expense, the Required
Consents for the use of the Licensed Software by Purchaser on
Purchaser's computer processing system in the same manner as
used by the relevant Seller prior to the Closing Date. If a
vendor refuses to assign, license or sublicense such Licensed
Software to Purchaser for use of the Licensed Software on
Purchaser's computer processing system, Sellers shall assist
the Purchaser in attempting to locate suitable substitute
software.
4. Database. Sections 3.14.1 and 3.14.2 of the Agreement are
--------
hereby deleted in their entirety and replaced with the following:
3.14. At the Closing, Purchaser and Sellers shall enter into
a license pursuant to which Sellers shall grant to Purchaser a
perpetual royalty-free, license ("Database License") to use the
----------------
Database in order to operate the Business after the Closing in
the same manner as operated by the Sellers.
5. Tangible Assets. Pursuant to Section 2.1.1 of the Agreement,
---------------
the Sellers agreed to transfer to Purchaser the Transferred Assets, including
certain Tangible Assets mutually agreed upon by Sellers and Purchaser.
Purchaser has notified Sellers of its desire to lease and/or sublease certain
of the Tangible Assets. Purchaser and Sellers hereby agree that effective on
the Closing Date, the parties shall enter into leases and/or subleases
mutually acceptable to the parties with respect to certain Tangible Assets
previously identified by Sellers and Purchaser to be leased or subleased.
20
<PAGE> 21
6. Miscellaneous. Except as amended by this Amendment, the
-------------
Agreement shall remain in full force and effect as originally executed and
delivered. This Amendment may be executed in any number counterparts, each of
which when executed is an original but all counterparts together constitute
the same document. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE> 22
IN WITNESS WHEREOF, the undersigned have hereunto set their respective
hands effective the date and year first above written.
GREAT AMERICAN INSURANCE COMPANY
By: /s/ Karen Holley Horrell
---------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
------------------------------------
AMERICAN NATIONAL FIRE INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
AGRICULTURAL EXCESS AND SURPLUS
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
---------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
AGRICULTURAL INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
22
<PAGE> 23
AMERICAN ALLIANCE INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
AMERICAN DYNASTY SURPLUS LINES
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
AMERICAN SPIRIT INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
CONTEMPORARY AMERICAN INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
23
<PAGE> 24
EAGLE AMERICAN INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
EDEN PARK INSURANCE COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
GREAT TEXAS COUNTY MUTUAL INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
----------------------------------------
Name: Karen Holley Horrell
--------------------------------------
Title: Senior Vice President
-------------------------------------
GREAT AMERICAN LLOYD'S INSURANCE
COMPANY,
By: Great American Lloyd's, Inc., its
Manager
By: /s/ Karen Holley Horrell
---------------------------------------
Name: Karen Holley Horrell
-------------------------------------
Title: Senior Vice President
------------------------------------
24
<PAGE> 25
SEVEN HILLS INSURANCE COMPANY
By: /s/ Karen Holley Horrell
---------------------------------------
Name: Karen Holley Horrell
-------------------------------------
Title: Senior Vice President
------------------------------------
THE OHIO CASUALTY INSURANCE COMPANY
By: /s/ Lauren N. Patch
---------------------------------------
Name: Lauren N. Patch
-------------------------------------
Title: President
------------------------------------
25
<PAGE> 26
Exhibit 2(c)
Reinsurance Agreement,
dated December 1, 1998, among The Ohio Casualty Insurance Company,
Great American Insurance Company and the other Companies named therein
26
<PAGE> 27
- ------------------------------------------------------------------------------
REINSURANCE AGREEMENT
EFFECTIVE DECEMBER 1, 1998
BETWEEN
GREAT AMERICAN INSURANCE COMPANY
AMERICAN NATIONAL FIRE INSURANCE COMPANY
AGRICULTURAL EXCESS AND SURPLUS INSURANCE COMPANY
AGRICULTURAL INSURANCE COMPANY
AMERICAN ALLIANCE INSURANCE COMPANY
AMERICAN DYNASTY SURPLUS LINES INSURANCE COMPANY
AMERICAN SPIRIT INSURANCE COMPANY
CONTEMPORARY AMERICAN INSURANCE COMPANY
EAGLE AMERICAN INSURANCE COMPANY
EDEN PARK INSURANCE COMPANY
GREAT AMERICAN LLOYD'S INSURANCE COMPANY
GREAT TEXAS COUNTY MUTUAL INSURANCE COMPANY
SEVEN HILLS INSURANCE COMPANY
("COMPANY" or "COMPANIES")
AND
THE OHIO CASUALTY INSURANCE COMPANY
("REINSURER")
- ------------------------------------------------------------------------------
27
<PAGE> 28
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS................................................. 29
-----------
ARTICLE 2 BUSINESS REINSURED.......................................... 30
------------------
ARTICLE 3 OBLIGATORY AGREEMENT........................................ 30
--------------------
ARTICLE 4 NET RETAINED LINES.......................................... 30
------------------
ARTICLE 5 EXTRA CONTRACTUAL LIMITATIONS............................... 31
-----------------------------
ARTICLE 6 REINSURER'S RIGHTS AND OBLIGATIONS.......................... 32
----------------------------------
ARTICLE 7 RENEWALS AND NEW BUSINESS................................... 33
-------------------------
ARTICLE 8 REPORTING................................................... 34
---------
ARTICLE 9 INDEMNIFICATION............................................. 34
---------------
ARTICLE 10 NOTICES.................................................... 35
-------
ARTICLE 11 NON-ASSIGNABILITY.......................................... 35
-----------------
ARTICLE 12 INSOLVENCY................................................. 35
----------
ARTICLE 13 APPLICABLE LAW............................................. 36
--------------
28
<PAGE> 29
REINSURANCE AGREEMENT
---------------------
THIS AGREEMENT is made and entered into as of December 1, 1998 by Great
American Insurance Company, American National Fire Insurance Company,
Agricultural Excess and Surplus Insurance Company, Agricultural Insurance
Company, American Alliance Insurance Company, American Dynasty Surplus Lines
Insurance Company, American Spirit Insurance Company, Contemporary American
Insurance Company, Eagle American Insurance Company, Eden Park Insurance
Company, Great American Lloyd's Insurance Company, Great Texas County Mutual
Insurance Company and Seven Hills Insurance Company (hereinafter called the
"COMPANY" or the "COMPANIES") and The Ohio Casualty Insurance Company
(hereinafter called the "REINSURER").
WHEREAS, COMPANIES and REINSURER are entering into this Agreement pursuant to
the Purchase Agreement (as defined below); and
WHEREAS, COMPANIES have agreed to cede to REINSURER and REINSURER has agreed
to assume certain liabilities and obligations of COMPANIES under the Insurance
Contracts (as defined in the Purchase Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and promises and upon
the terms and conditions set forth herein, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
-----------
Capitalized terms used herein and not otherwise defined in this Agreement
shall have the meaning given to them in the Purchase Agreement. The following
terms shall have the following meanings:
"Effective Date" means the date specified in the first paragraph hereof.
"Purchase Agreement" means the Asset Purchase Agreement dated as of September
14, 1998 among the COMPANIES and the REINSURER.
"Ultimate Net Aggregate Losses" shall mean the sum of:
1) Actual loss payments paid in settlement of claims or suits or
in satisfaction of judgments on business covered by this
Agreement; plus
2) Loss Expense paid in connection with the business covered by
this Agreement; plus
29
<PAGE> 30
3) Extra Contractual Obligations arising from conduct of the
COMPANIES paid in connection with the handling or resolution of
any losses reinsured hereunder; less
4) Sums recovered by way of salvage and subrogation, less the cost
of such recovery, in connection with the business covered under
this Agreement.
"Loss Expense" shall mean all expenses incurred in the investigation,
adjustment and defense of all claims under the Insurance Contracts, including
without limitation, loss expenses, court costs and pre-judgment and post-
judgment interest and declaratory judgment action expense; provided that Loss
Expense shall not include any expenses incurred by, nor shall Loss Expense
duplicate expenses incurred by, the REINSURER in performing its duties under
Article 6 herein.
ARTICLE 2
BUSINESS REINSURED
------------------
Each Insurance Contract shall be reinsured on a 100% quota share indemnity
reinsurance basis, and the COMPANIES shall cede, and the REINSURER shall
accept and assume and indemnify the COMPANIES for, 100% of the Insurance
Liabilities under such Insurance Contracts.
ARTICLE 3
OBLIGATORY AGREEMENT
--------------------
The liability of the REINSURER with respect to all business reinsured under
this Agreement is obligatory and the liability shall begin and end
simultaneously with that of the COMPANIES. Subject to the provisions of
Article 6 herein, the REINSURER shall be bound by all alterations, waivers,
cancellations, rates, terms, conditions, interpretations, amendments and
extensions agreed to by the COMPANIES in connection with all Insurance
Contracts.
ARTICLE 4
NET RETAINED LINES
------------------
This Agreement applies only to that portion of the business covered under
Article 2 which the COMPANIES retains net for its own account. In calculating
the amount of any loss payable under this Agreement, only losses in respect of
that portion of the business which the COMPANIES retains net for its own
account shall be included. The REINSURER shall be liable to pay the Ultimate
Net Aggregate Losses on that portion of the business retained by the
COMPANIES.
30
<PAGE> 31
The COMPANIES shall not amend, modify or terminate any of the reinsurance
treaties identified on Schedule 3.11 of the Purchase Agreement, or enter into
any new reinsurance treaties (whether ceded or assumed) related to the
Insurance Contracts, to the extent that any such action affects liability
under any such reinsurance treaties for periods on or prior to the Effective
Date, without the prior written consent of the REINSURER. As relating to the
business reinsured hereunder, all run-off protection shall either (i) be
maintained by the COMPANIES or (ii) be deemed to be maintained by the
COMPANIES. The COMPANIES also shall maintain (at its sole cost and expense)
and reinstate, if necessary, all such reinsurance treaties until their natural
expiration; provided, that the COMPANIES and the REINSURER shall allocate all
reinstatement premiums, costs and expenses between them in the same manner in
which the COMPANIES and its Affiliates historically have made such allocation
in the ordinary course of their business.
The COMPANIES shall indemnify, defend and hold REINSURER harmless from and
against all loss, liability and expense arising out of any breach of or
default under, including those arising out of the insolvency of any reinsurer
under, any of the reinsurance treaties identified on Schedule 3.11 of the
Purchase Agreement, which losses, liabilities or expenses relate to any
periods prior to the Effective Date.
REINSURER may request that the COMPANIES consent to amend, modify or terminate
any reinsurance treaties identified on Schedule 3.11 of the Purchase
Agreement, which consent shall not be unreasonably withheld. Any such
reinsurance treaty may be so amended, modified or terminated on terms
acceptable to the COMPANIES and the REINSURER.
ARTICLE 5
EXTRA CONTRACTUAL LIMITATIONS
-----------------------------
Notwithstanding anything to the contrary contained herein or in the Purchase
Agreement, REINSURER's obligation for Extra Contractual Obligations shall be
limited on any individual loss, or any series of losses attributable to the
same or related cause, to Ten Million and 00/100 Dollars ($10,000,000). In
the case of any Extra Contractual Obligation claim asserted by a third party
in excess of One Million and 00/100 Dollars ($1,000,000), REINSURER shall
immediately notify COMPANIES of such claim and shall permit the COMPANIES to
participate in any settlement negotiations regarding such claim. REINSURER
shall not consent to any settlement of such claim without the prior written
consent of COMPANIES, which consent shall not be unreasonably withheld. If
the COMPANIES, against the written objection of the REINSURER, reject any such
settlement and if either (i) a settlement of such claim is thereafter reached,
the amount of which exceeds the rejected settlement, or (ii) a court of
competent jurisdiction enters a judgment
31
<PAGE> 32
adverse to any of the COMPANIES or the REINSURER regarding such claim, the
amount of which judgment exceeds the rejected settlement, then the COMPANIES
shall be liable to the REINSURER (subject to the provisions of the first
sentence of this Article 5) for the difference between the actual settlement
referenced in clause (i) or the judgment entered pursuant to clause (ii),
whichever the case may be, minus the amount of the settlement which the
COMPANIES rejected. Notwithstanding anything to the contrary in this
Agreement, REINSURER's liability for Extra Contractual Obligations shall
be for the first Ten Million and 00/100 Dollars ($10,000,000) payable without
regard to any other reinsurance of COMPANIES.
ARTICLE 6
REINSURER'S RIGHTS AND OBLIGATIONS
----------------------------------
On and after the Effective Date the parties agree that REINSURER shall have
the right and obligation, at its own expense, to exercise and perform all of
the COMPANIES' rights and obligations under and in connection with the
Insurance Contracts and COMPANIES hereby assign, transfer and grant to
REINSURER all of the rights, powers and privileges of COMPANIES to exercise
and perform the same. On and after the Effective Date, the COMPANIES shall
not take any action, nor shall it fail to take any action, which adversely
affects the ability of REINSURER to fully administer the Insurance Contracts
and the liabilities related thereto. Without limiting the generality of the
foregoing, it is agreed that REINSURER shall have the right and/or obligation
(a) to give, receive, execute, issue and deliver all notices, endorsements,
waivers, demands, proofs and agreements of every kind and nature which may be
necessary or desirable in connection with the Insurance Contracts, (b) to ask,
demand, attach, sue for, recover, receive and receipt for all premiums, debts
and sums of money due or becoming due under or in connection with the
Insurance Contracts, (c) to adjust, settle, pay, defend, arbitrate and/or
compromise any and all claims under or in connection with the Insurance
Contracts, and (d) to prosecute or defend any action which REINSURER deems
necessary or desirable in order to exercise the rights, powers and privileges
granted to REINSURER hereunder. COMPANIES hereby reserve all rights with
respect to other ceded reinsurance applicable to the Insurance Contracts and
REINSURER shall have no right with respect to such ceded reinsurance.
32
<PAGE> 33
ARTICLE 7
RENEWALS AND NEW BUSINESS
-------------------------
A. Except only as provided in Article 7C below, from and after the
Effective Date, the COMPANIES shall cease renewing any and all
Insurance Contracts, and the REINSURER shall possess the sole and
exclusive right to renew any and all Insurance Contracts. The
COMPANIES shall send to each policyholder and contractholder of the
Insuranc Contracts written notice substantially in the form of
Schedule 1 hereto, informing the policyholder or contractholder of this
Agreement and encouraging him, her or it to renew the Insurance
Contracts with the REINSURER.
B. The REINSURER intends to appoint all of the agents of the COMPANIES who
produced the Insurance Contracts to offer the REINSURER's own policies
and contracts of the insurance to renew and replace the Insurance
Contracts. The COMPANIES authorize the REINSURER to make such
appointments, and the COMPANIES shall send to each such agent written
notice substantially in the form of Schedule 2 hereto, informing the
agents of the Agreement and encouraging him, her or it to accept the
appointment of the REINSURER.
C. If, from the Effective Date and continuing for a period of 24 months
thereafter, the REINSURER is unable to renew for any reason whatsoever,
the Insurance Contracts on its own policies and contracts of insurance,
then, upon the REINSURER's written request, the COMPANIES shall offer
to renew such of the Insurance Contracts which the REINSURER cannot
renew on its own policies. If, during this same period, the REINSURER
is unable to issue for any reason whatsoever a policy or contract of
insurance representing new business, which policy or contract would
have been an Insurance Contract had the policy been in force on the
Effective Date, then, upon the REINSURER's written request, the
COMPANIES shall offer to issue policies or contracts of insurance for
such new business. All policies and contracts of insurance issued by
the COMPANIES under this Article 7C shall be deemed to be Insurance
Contracts reinsured hereunder for all purposes of this Agreement.
Likewise, if REINSURER does not for any reason renew any of the
Insurance Contracts and the COMPANIES are required to renew them, such
renewal policies shall be deemed to be Insurance Contracts reinsured
hereunder. All policies and contracts of insurance issued by the
COMPANIES under this Article 7C shall be reinsured one hundred percent
(100%) by REINSURER with no portion of the liabilities thereunder ceded
by the COMPANIES to other reinsurers.
D. The REINSURER will comply with all applicable renewal and/or nonrenewal
laws and regulations. The COMPANIES will be responsible for compliance
33
<PAGE> 34
with all laws and regulations applicable to issuance of policies and
contracts under Article 7C above.
E. The REINSURER agrees (i) to reimburse the COMPANIES for commissions and
premium taxes incurred in issuing policies and contracts under Article
7C above and (ii) to pay to the COMPANIES a ceding commission equal to
two and one half percent (2.5%) of the net premiums received on such
policies and contracts. "Net premiums" shall mean gross the group of
premiums received on such policies less return premiums paid for
reinsurance ceded to third parties.
ARTICLE 8
REPORTING
---------
Within fifteen (15) days after the end of each calendar month hereunder, the
REINSURER shall provide to the Sellers' Representative a written report
summarizing all reinsurance hereunder, in such form and addressing such items
as the parties shall mutually agree. If the Seller's Representative does not
object to any such report within ten (10) days of its receipt thereof, then
the report shall be deemed to be final and conclusive as to all parties and
all matters addressed in the report, and all payments required to be made
under the report shall be made by the responsible party by wire transfer of
immediately available funds within five (5) business days after the expiration
of the aforesaid ten (10) day review period.
ARTICLE 9
INDEMNIFICATION
---------------
REINSURER shall indemnify, defend and hold COMPANIES harmless from and against
all loss, liability and expense arising out of any failure of REINSURER to
properly perform its obligations under this Agreement.
The COMPANIES, jointly and severally, shall indemnify, defend and hold
REINSURER harmless from and against all loss, liability and expense arising
out of any failure of any of the COMPANIES to properly perform its or their
obligations under the Agreement.
34
<PAGE> 35
ARTICLE 10
NOTICES
-------
All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been delivered (a) upon receipt if
delivered by hand, and (b) three days after mailing if mailed by first class,
registered or certified mail, return receipt requested, postage and registry
fees prepaid and addressed as follows:
If to COMPANIES:
Great American Insurance Company
580 Walnut Street
Cincinnati, Ohio 45202
Attention: President
If to REINSURER
The Ohio Casualty Insurance Company
136 North Third Street
Hamilton, Ohio 45025
Attention: Chief Executive Officer
Addresses may be changed by written notice signed by the addressee.
ARTICLE 11
NON-ASSIGNABILITY
-----------------
Neither COMPANIES nor REINSURER may assign any of its rights or obligations
under this Agreement without the express written consent of the other;
provided, that the REINSURER may assign any rights, interests or obligations
hereunder to any of its Affiliates without the prior written consent of the
COMPANIES; provided further, that in the event of any such assignment the
REINSURER shall remain liable with respect to its obligations hereunder.
ARTICLE 12
INSOLVENCY
----------
In the event of a COMPANY's insolvency (an "Insolvent Company"), the
reinsurance afforded by this Agreement will be payable by the REINSURER on the
basis of the Insolvent Company's liability under the Insurance Contracts
without diminution because of the Insolvent Company's insolvency or because
its liquidator, receiver,
35
<PAGE> 36
conservator, or statutory successor has failed to pay all or a portion of any
claims, subject however, to the right of the REINSURER to offset against such
funds due hereunder, any sums that may be payable to it by the Insolvent
Company in accordance with this Agreement. The reinsurance will be payable by
the REINSURER directly to the Insolvent Company, its liquidator, receiver,
conservator, or statutory successor except (a) where this Agreement
specifically provides another payee of such reinsurance in the event of the
Insolvent Company's insolvency, or (b) where the REINSURER, with the consent
of the direct insured or insureds, has assumed such policy obligations of the
Insolvent Company as direct obligations of itself to the payees under such
policies in substitution for the Insolvent Company's obligation to such payees.
The Insolvent Company's liquidator, receiver, conservator, or statutory
successor will give written notice of pendency of a claim against the
Insolvent Company under the policies reinsured within a reasonable time after
such claim is filed in the insolvency proceeding. During the pendency of such
claim, the REINSURER may investigate said claim and interpose in the
proceeding where the claim is to be adjudicated, at its own expense, any
defense that it may deem available to the Insolvent Company, its liquidator,
receiver, conservator, or statutory successor. The expense thus incurred by
the REINSURER will be chargeable against the Insolvent Company, subject to
court approval, as part of the expense of conservation or liquidation to the
extent that such proportionate share of the benefit will accrue to the
Insolvent Company solely as a result of the defense undertaken by the
REINSURER. Where two or more reinsurers are involved in the same claim, and
a majority in interest elect to interpose defense to such claim, the expense
will be apportioned in accordance with the terms of this Agreement as though
such expense had been incurred by the Insolvent Company.
ARTICLE 13
APPLICABLE LAW
--------------
This Agreement shall be construed in accordance with the laws of the State of
Ohio.
36
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
effective the date first above written.
GREAT AMERICAN INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
--------------------------------------
Karen Holley Horrell
Senior Vice President
AMERICAN NATIONAL FIRE INSURANCE
COMPANY
BY: /s/ Karen Holley Horrell
--------------------------------------
Karen Holley Horrell
Senior Vice President
AGRICULTURAL EXCESS AND SURPLUS
INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
--------------------------------------
Karen Holley Horrell
Senior Vice President
AGRICULTURAL INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
--------------------------------------
Karen Holley Horrell
Senior Vice President
AMERICAN ALLIANCE INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
--------------------------------------
Karen Holley Horrell
Senior Vice President
37
<PAGE> 38
AMERICAN DYNASTY SURPLUS LINES
INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
-------------------------------------
Karen Holley Horrell
Senior Vice President
AMERICAN SPIRIT INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
-------------------------------------
Karen Holley Horrell
Senior Vice President
CONTEMPORARY AMERICAN INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
EAGLE AMERICAN INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
EDEN PARK INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
38
<PAGE> 39
GREAT AMERICAN LLOYD'S INSURANCE
COMPANY
By its Attorney-In-Fact, Great American
Lloyd's, Inc.
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
GREAT TEXAS COUNTY MUTUAL INSURANCE
COMPANY
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
SEVEN HILLS INSURANCE COMPANY
BY: /s/ Karen Holley Horrell
------------------------------------
Karen Holley Horrell
Senior Vice President
THE OHIO CASUALTY INSURANCE COMPANY
BY: /s/ Lauren N. Patch
-----------------------------------
Lauren N. Patch
President
39
<PAGE> 40
Exhibit 2(d)
Warrant Agreement,
dated December 1, 1998, between Ohio Casualty Corporation
and Great American Insurance Company and Warrant dated December 1, 1998
40
<PAGE> 41
OHIO CASUALTY CORPORATION
AND
GREAT AMERICAN INSURANCE COMPANY
****************
WARRANT AGREEMENT
Dated as of December 1, 1998
****************
41
<PAGE> 42
WARRANT AGREEMENT, dated as of December 1, 1998, between OHIO CASUALTY
CORPORATION, an Ohio corporation (the "Company"), and GREAT AMERICAN INSURANCE
COMPANY ("GAIC"), an Ohio corporation ("Agreement").
The Company proposes to issue to GAIC a Common Share Purchase Warrant,
as hereinafter described (the "Warrant"), to purchase up to an aggregate of
3,000,000 Common Shares, par value of $.125 per share ("Common Shares"), of
the Company (the Common Shares issuable on exercise of the Warrant being
referred to herein as the "Warrant Shares"), pursuant to an Asset Purchase
Agreement dated as of September 14, 1998, among Ohio Casualty Insurance
Company, a wholly-owned subsidiary of the Company, and GAIC and certain of its
subsidiaries (the "Purchase Agreement"). (The Warrant and any warrants issued
in substitution or exchange therefor as provided herein are collectively
referred to as the "Warrants.")
In consideration of the foregoing, and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder of the Company and GAIC and the persons to whom the Warrant or the
Warrant Shares may be transferred pursuant to Section 13 hereof (GAIC and such
transferees being herein referred to individually as a "Holder" and
collectively as the "Holders"), the Company and GAIC hereby agree as follows:
SECTION 1. SECURITIES ACT RESTRICTIONS. The Warrant and the Warrant
Shares will be issued without registration under the Securities Act of 1933,
as amended (the "Securities Act"), and may not be sold, transferred, assigned
or hypothecated except pursuant to a registration statement registering such
securities under the Act or in a transaction as to which the Company has
received an opinion of counsel for the Holder reasonably satisfactory to the
Company that such registration is not required. Each certificate representing
Warrants or Warrant Shares shall be endorsed with a legend, substantially in
the following form, and any other legend required by applicable state
securities laws:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR UNLESS THE
ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE ISSUER, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
Any legend endorsed on a certificate pursuant to this Section 1
shall be removed, and the Company shall issue a certificate without such
legend to any Holder, if the Warrants and/or Warrant Shares are registered
under the Securities
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Act and a prospectus meeting the requirements of Section 10 of the Securities
Act is available or if the Holder provides the Company with an opinion of
counsel, reasonably satisfactory to legal counsel for the Company, to the
effect that a sale, transfer or assignment of such Warrants and/or Warrant
Shares may be made without registration.
SECTION 2. REGISTRATION, TRANSFERABILITY AND FORM OF WARRANTS.
2.1 REGISTRATION. The Warrants shall be numbered and shall
be registered in a Warrant Register as they are issued. The Company shall be
entitled to treat the Holder of any Warrant as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in such Warrant on the part of any other person, and shall not
be liable for any registration of transfer of Warrants which are registered or
to be registered in the name of a fiduciary or the nominee of a fiduciary
unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration of transfer, or
with such knowledge of such acts that its participation therein amounts to bad
faith.
2.2 TRANSFER. Subject to Sections 1 and 13 hereof, the
Warrants shall be transferable on the books of the Company maintained at the
principal office of the Company upon delivery thereof, duly endorsed by the
Holder or by its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer, which
endorsement shall be guaranteed by a bank or trust company or a broker or
dealer which is a member of the National Association of Securities Dealers,
Inc. In all cases of transfer by an attorney, the original power of attorney,
duly approved, or a copy thereof, duly certified, shall be deposited and
remain with the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated evidence of their
authority shall be produced, and may be required to be deposited and remain
with the Company in its discretion. Upon any registration of transfer, the
Company shall deliver a new Warrant or Warrants to the persons entitled
thereto.
2.3 FORM OF WARRANT. The text of the Warrant and any
substitute Warrants and of the Purchase Form shall be substantially as set
forth in Exhibit A attached hereto. The price per Warrant Share and the
number of Warrant Shares issuable upon exercise of each Warrant are subject to
adjustment upon the occurrence of certain events, all as hereinafter provided.
The Warrants shall be executed on behalf of the Company by its President or
one of its Vice Presidents and attested by its Secretary or an Assistant
Secretary. The signature of any such officers on the Warrants may be manual
or facsimile.
Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company,
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notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
offices on the date of this Agreement.
The Warrant shall be dated as of the Closing Date (as defined
in the Purchase Agreement) and the Warrants issued in substitution or exchange
therefor shall be dated as of the date of issuance thereof by the Company.
SECTION 3. EXCHANGE OF WARRANT CERTIFICATES. Each Warrant certificate
may be exchanged for another certificate or certificates entitling the Holder
thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle such Holder to purchase.
Any Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate or certificates to be so exchanged.
Thereupon, the Company shall deliver to the person entitled thereto a new
Warrant certificate or certificates, as the case may be, as so requested.
SECTION 4. WARRANT AGENT. The Company may, by written notice to the
Holders, appoint an agent for the purpose of maintaining the Warrant Register,
issuing Warrant Shares, exchanging or transferring the Warrants or any of the
foregoing. Thereafter, such registration, issuance, exchange or transfer, as
the case may be, shall be made at the office of such agent.
SECTION 5. TERM OF WARRANTS; EXERCISE OF WARRANTS.
5.1 TERM OF WARRANTS. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised, in whole
or in part, commencing on December 1, 1999 (the first anniversary of the date
of issuance of the Warrants) and ending at 5:00 P.M., New York time, on
November 30, 2003 (the "Expiration Date"), to purchase from the Company the
number of fully paid and nonassessable Warrant Shares which the Holder may at
the time be entitled to purchase on exercise of such Warrants; provided,
however, that the Warrants shall become immediately exercisable upon (a) the
announcement of the commencement of a tender or exchange offer for 25% or more
of the Common Shares or (b) a proposal of a merger, consolidation,
liquidation, sale of all or substantially all of the assets, change in control
or other similar event requiring the consent of the Company's shareholders.
5.2 EXERCISE OF WARRANTS. Warrants may be exercised upon
surrender to the Company at its principal office of the certificate or
certificates evidencing the Warrants to be exercised, together with the form
of election to purchase on the reverse thereof duly filled in and signed,
which signature shall be guaranteed by a bank or trust company or a broker or
dealer which is a member of the National Association of Securities Dealers,
Inc., and upon payment to the Company of the Warrant Price (as defined in and
determined in accordance with the provisions of Sections 9 and 10 hereof), for
the number of Warrant Shares in respect
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of which such Warrants are then exercised. Payment of the aggregate Warrant
Price shall be made in cash, by certified or bank cashier's check drawn on a
banking institution chartered by the government of the United States or any
state thereof, outstanding Company debt at its face value (with no regard to
accrued interest) or any combination thereof. The Warrant Price may also be
paid by surrendering Warrants (the "Net Issuance") as determined below. If
the Net Issuance method is elected, the Company will issue Common Shares in
accordance with the following formula:
X = Y (A-B)
-------
A
where X = the net number of Warrant Shares to be issued
to the Holder;
Y = the number of Warrant Shares requested to be
exercised (including the Warrant Shares
evidenced by the portion of the Warrant
surrendered to pay the Warrant Price);
A = the current market price per Common Share (as
defined in Section 10.1.4); and
B = the Warrant Price.
Subject to Section 6 hereof, upon such surrender of Warrants
and payment of the Warrant Price as aforesaid, the Company shall cause to be
issued and delivered with all reasonable dispatch to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants, together with cash, as provided in Section
11 hereof, in respect of any fractional Warrant Shares otherwise issuable upon
such surrender. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Warrant Price, as aforesaid.
The rights of purchase represented by the Warrants shall be exercisable, at
the election of the Holders thereof, either in full or from time to time in
part and, in the event that a certificate evidencing Warrants is exercised in
respect of less than all of the Warrant Shares purchasable on such exercise at
any time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrants will be issued.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes, if any, attributable to the initial issuance of Warrant Shares
upon the exercise of Warrants; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the
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issue or delivery of any Warrants or certificates for Warrant Shares in a
name other than that of the registered Holder of the Warrants in respect of
which such Warrant Shares are issued.
SECTION 7. MUTILATED OR MISSING WARRANTS. In case any of the
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution
for, and upon cancellation of the mutilated Warrant certificate, or in lieu of
and substitution for the Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant certificate and
indemnity or bond, if requested, also reasonably satisfactory to it. An
applicant for such a substitute Warrant certificate shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 8. THE COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 ORGANIZATION, STANDING AND AUTHORITY. The Company is
organized, validly existing and in good standing under the laws of the State
of Ohio and has the requisite corporate power and authority to carry on the
operations of its business as they are now being conducted.
8.2 AUTHORIZATION. The Company has the requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement. The execution and delivery by the Company of this Agreement and
the performance by the Company of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of the Company and
its shareholders. This Agreement has been duly executed and delivered by the
Company and, subject to the due execution and delivery hereof by GAIC, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
8.3 NO CONFLICT OR VIOLATOIN, ETC. The execution and
delivery by the Company of this Agreement do not, and the consummation by the
Company of the transactions contemplated by this Agreement and compliance with
the provisions hereof will not, (a) conflict with any of the provisions of the
Articles of Incorporation or Regulations of the Company; (b) subject to the
matters referred to in the next sentence, conflict with, result in a breach of
or default (with or without notice or lapse of time, or both) under, give rise
to a right of termination, cancellation or acceleration of any obligation or
less of a benefit under, require the consent of any person under, or
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<PAGE> 47
result in the creation of a lien or other encumbrance on any property or asset
of the Company under, any indenture or other agreement, permit, franchise,
license or other instrument or undertaking to which it is a party or by which
it or any of its assets is bound or affected, or (c) subject to the matters
referred to in the next sentence, contravene any statute, law, ordinance,
rule, regulation, order, judgment, injunction, decree, determination or award
applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, which, in the case of clauses (b) and (c)
above, individually or in the aggregate, could reasonably be expected to have
a material adverse effect on the Company and its subsidiaries taken as a
whole. No consent, approval or authorization of, or declaration or filing
with, or notice to, any governmental or regulatory authority or agency is
required to be obtained or made by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for securities law filings, approvals
and authorizations applicable to the issuance of the Warrant and the Warrant
Shares and such other consents, approvals, authorizations, declarations,
filings or notices the failure to obtain or make which, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the Company and its subsidiaries taken as a whole.
8.4 FINANCIAL STATEMENTS. The Company has delivered to
GAIC: (a) audited balance sheets of the Company as at December 31, in each of
the years 1995, 1996 and 1997, and the related audited statements of income
for each of the years then ended (the "Financial Statements"), and (b) an
unaudited balance sheet of the Company as at June 30, 1998, and the related
unaudited statement of income for the six (6) month period then ended. Any
such financial statements relating to periods after June 1, 1997, fairly
present in all material respects the financial condition and results of
operations of the Company as at the respective dates of and for the periods
referred to in such financial statements in accordance with the Accounting
Principles (as defined in the Purchase Agreement). Any interim financial
statements are further subject to normal recurring year end adjustments (none
of which, individually or in the aggregate, shall be material).
8.5 SEC REPORTS. Since June 1, 1997, The Company has
timely filed with the Securities and Exchange Commission ("SEC") all materials
and documents required to be filed by it under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). (All the materials and documents filed
with the SEC by the Company since June 1, 1997, are hereinafter referred to as
the "SEC Reports.") The SEC Reports, copies of which have been delivered to
GAIC, are true and correct in all material respects, including the financial
statements and other financial information contained therein, and do not omit
to state any material fact necessary to make the statements in such SEC
Reports, in light of the circumstances in which they were made, not
misleading.
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8.6 CAPITALIZATOIN OF THE COMPANY. Exhibit B hereto sets
forth the authorized capitalization of the Company and the number of shares of
each class of stock of the Company issued and outstanding thereof. All of
such issued and outstanding shares have been duly authorized and validly
issued, are fully paid and nonassessable and free of any claims of preemptive
rights. Other than as created pursuant to this Agreement, the Purchase
Agreement and common share purchase rights and stock option plans adopted
prior to the date hereof by the Company and reflected in the Financial
Statements, there are no outstanding subscriptions, options, warrants, rights,
convertible or exchangeable securities or other agreements of any character
relating to the issued or unissued capital stock of the Company obligating it
to issue additional shares of capital stock.
8.7 RESERVATION OF WARRANT SHARES. There has been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Shares, a number of Common Shares sufficient to provide for
the exercise of the rights of purchase represented by the outstanding
Warrants. The Transfer Agent for the Common Shares and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized
shares as shall be required for such purpose. The Company will keep a copy of
this Agreement on file with the Transfer Agent for the Common Shares and with
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Company will supply such Transfer Agent with duly executed
share certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 11 hereof.
8.8 REGISTRATION RIGHTS. Subject to Section 13, the
registration rights set forth in Exhibit C attached hereto shall apply to all
Warrant Shares and/or other securities received by any Holder at the time a
Warrant is exercised ("Registrable Securities").
SECTION 9. WARRANT PRICE. The price per share at which Warrant Shares
shall be purchasable upon exercise of Warrants shall be $45.01 (the "Warrant
Price"), subject to adjustment pursuant to Section 10 hereof.
SECTION 10. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES.
The number and kind of securities purchasable upon the exercise of each
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as hereinafter defined.
10.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as stated below:
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<PAGE> 49
10.1.1 Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted as provided in this Section 10.1.1;
the Warrant Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment and of which the denominator shall be the number of Warrant
Shares purchasable immediately thereafter.
(a) In case the Company shall (i) pay or make a
dividend distribution in its Common Shares, (ii) subdivide its
outstanding Common Shares, (iii) combine its outstanding Common
Shares into a smaller number of Common Shares or (iv) issue by
reclassification of its Common Shares other securities of the
Company (including any such reclassification in connection with
a consolidation or merger in which the Company is the resulting
or surviving corporation), the number of Warrant Shares
purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder of each Warrant
shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company which that Holder
would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant
been exercised immediately prior to the happening of such event
or any record date with respect thereto. An adjustment made
pursuant to this Section 10.1.1(a) shall become effective
immediately after the effective date of such event retroactive
to the record date, if any.
(b) In case the Company shall issue rights, options
or warrants to all holders of its outstanding Common Shares,
without any charge to such holders, entitling them (for a
period within 90 days after the record date mentioned below) to
subscribe for or purchase Common Shares at a price per share
which is lower at the record date mentioned below than the then
current market price per Common Share (as defined in Section
10.1.4 below) the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a
fraction, of which the numerator shall be the number of Common
Shares outstanding on the date of issuance of such rights,
options or warrants plus the number of additional Common Shares
offered for subscription or purchase, and of which the
denominator shall be the number of Common Shares outstanding on
the date of issuance of such rights, options or warrants plus
the number of shares which the aggregate offering price of the
total number of Common Shares so offered would purchase at such
then current market price per Common Share. Such adjustment
shall be made whenever such rights, options or
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warrants are issued, and shall become effective retroactively
immediately after the record date for the determination of
shareholders entitled to receive such rights, options or
warrants.
10.1.2 In case the Company shall distribute to all
holders of its Common Shares evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of consolidated
earnings or earned surplus and dividends or distributions referred to
in Section 10.1.1(a) above) or rights, options or warrants, or
convertible or exchangeable securities containing the right to
subscribe for or purchase Common Shares (excluding those referred to
in Section 10.1.1(b) above), then in each case the Warrant Price
payable upon the exercise of each Warrant shall be adjusted by
multiplying the Warrant Price immediately prior to such adjustment by a
fraction, of which the numerator shall be (a) the then current market price
per Common Share (as defined in Section 10.1.4 below) on the date of such
distribution, less (b) the then fair value (as determined in good faith by
the Board of Directors of the Company, whose determination, in the absence
of manifest error, shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such subscription rights,
options or warrants or of such convertible or exchangeable securities
applicable to one Common Share, and of which the denominator shall be such
then current market price per Common Share. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on
the date of distribution retroactive to the record date for the determination
of shareholders entitled to receive such distribution.
10.1.3 In case the Company shall issue Common Shares (or rights,
warrants or other securities convertible into or exchangeable or exercisable
for Common Shares) at a price per share (or having an effective exercise,
exchange or conversion price per share) less than the then current market
price per Common Share (as defined in Section 10.1.4 below), then in each
such case the Warrant Price shall be adjusted by multiplying the Warrant
Price in effect immediately prior to the date of issuance of such Common
Shares (or rights, warrants or other securities) by a fraction, the numerator
of which shall be the sum of (a) the number of Common Shares outstanding on
the date of such issuance (without giving effect to any such issuance) and
(b) the number of shares which the aggregate consideration receivable by the
Company for the total number of Common Shares so issued (or into or for which
such rights, warrants or other securities are convertible, exchangeable or
exercisable) would purchase at such then current market price, and the
denominator of which shall be the sum of (y) the number of Common Shares
outstanding on the date of such issuance (without giving effect to any such
issuance) and (z) the number of additional Common Shares so
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issued (or into or for which such rights, warrants or other securities are
convertible, exchangeable or exercisable).
10.1.4 As used in this Agreement, (a) the "current market price per
Common Share" at any date shall be the average of the daily closing prices
for 20 consecutive trading days commencing 30 calendar days before the date
of such computation and the "closing price" for any day shall be the last
reported sales price regular way or, in case no reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if not listed or admitted
to trading, the average of the closing bid and asked prices of the Common
Shares in the over-the-counter market as reported by the NASDAQ National
Market System or any comparable system. In the absence of one or more such
quotations, the Company shall determine the current market price on the basis
of such quotations as it in good faith considers appropriate.
10.1.5 No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an increase
or decrease of at least one percent (1%) in the number of Warrant Shares
purchasable upon the exercise of each Warrant; provided, however, that any
adjustments which by reason of this Section 10.1.5 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth
of a share.
10.1.6 No adjustment in the number of Warrant Shares purchasable upon
the exercise of each Warrant, or in the Warrant Price, need be made under
Sections 10.1.1(b) and 10.1.2 if the Company issues or distributes to each
Holder of Warrants the rights, options, warrants, or convertible or
exchangeable securities, or evidence of indebtedness or assets referred to
in those Sections which each Holder of Warrants would have been entitled to
receive had the Warrants been exercised prior to the happening of such event
or the record date with respect thereto. No adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant, or in the
Warrant Price, need be made for (a) sales of Common Shares pursuant to a
Company plan for reinvestment of dividends or interest, (b) a change in the
par value of the Common Shares, (c) the issuance and subsequent exercise of
employee stock options and related stock appreciation rights, so long as the
employee stock options are exercisable at prices not less than the fair
market value of the Common Shares at the time of the grant of such options,
(d) issuances of restricted stock awards to employees
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as compensation or (e) issuances or sales of Common Shares in connection with
an underwritten public offering.
10.1.7 For the purpose of this Section 10.1, the term "Common Shares"
shall mean (a) the class of shares designated as the Common Shares of the
ompany at the date of this Agreement as set forth in the first recital of this
Agreement or (b) any other class of stock resulting from successive changes or
reclassification of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the
event that at any time, as a result of an adjustment made pursuant to Section
10.1.1(a) above, the Holders shall become entitled to purchase any shares
of the Company other than Common Shares, thereafter the number of such other
shares so purchasable upon exercise of each Warrant and the Warrant Price of
such shares shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in Sections 10.1.1 through 10.1.7, inclusive,
above, and the provisions of Section 5 and Sections 10.2 through 10.4,
inclusive, with respect to the Warrant Shares, shall apply on like terms to
any such other shares.
10.1.8 Upon the expiration of any rights, options, warrants or
conversion or exchange privileges, if any thereof shall not have been
exercised, the Warrant Price and the number of Common Shares purchasable upon
the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(a) the only Common Shares so issued were the Common Shares, if any, actually
issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (b) such Common Shares, if any, were issued
or sold for the consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided, further,
that no such readjustment shall have the effect of increasing the Warrant
Price by an amount in excess of the amount of the adjustment initially made
in respect to the issuance, sale of grant of such rights, options, warrants
or conversion or exchange rights.
10.2 DETERMINATOIN OF CONSIDERATION. Upon any issuance or
sale for a consideration other than cash, or a consideration part of which is
other than cash, of any Common Shares or securities convertible into or
exchangeable for Common Shares ("Convertible Securities") or any rights or
options to subscribe for, purchase or otherwise acquire any Common Shares or
Convertible Securities, the amount of the consideration other than cash
received by the Company shall be
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deemed to be the fair value of such consideration as determined in good faith
by the Board of Directors of the Company. In case any Common Shares or
Convertible Securities or any rights, options or warrants to subscribe for,
purchase or otherwise acquire any Common Shares or Convertible Securities
shall be issued or sold together with other shares or securities or other
assets of the Company for a consideration which covers both, the consideration
for the issue or sale of such Common Shares or Convertible Securities or such
rights or options shall be deemed to be the portion of such consideration
allocated thereto in good faith by the Board of Directors of the Company.
10.3 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may
at its option, at any time during the term of the Warrants, reduce the then
current Warrant Price to any amount deemed appropriate by the Board of
Directors of the Company.
10.4 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Warrant Price of
such Warrant Shares is adjusted, as herein provided, the Company shall
promptly mail, by first class mail, postage prepaid, to each Holder notice of
such adjustment or adjustments. The Company shall, upon the written request
at any time of any Holder, deliver a certificate of a firm of independent
public accountants selected by the Board of Directors of the Company (which
may be the regular accountants retained by the Company) setting forth (a) the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Warrant Price of such Warrant Shares after such adjustment, (b) a brief
statement of the facts requiring such adjustment and (c) the computation by
which such adjustment was made.
10.5 NO ADJUSTMENT OF DIVIDENDS. Except as provided in
Section 10.1, no adjustment in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
10.6 PRESERVATION OF PURCHASE RIGHTS RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or
merger of the Company into another corporation, or in case of any sale,
transfer or lease to another corporation of all or substantially all the
property of the Company, the Company or such successor or purchasing
corporation, as the case may be, shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company. Such agreement shall provide that each Holder shall have the right
thereafter upon payment of the Warrant Price in effect immediately prior to
such action to purchase upon exercise of each Warrant the kind and amount of
shares or other securities or property (including cash) which such Holder
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of
53
<PAGE> 54
dividends, interest or other income on or from such shares or other
securities and property shall be made during the term of a Warrant or upon the
exercise of a Warrant. The Company shall mail by first class mail, postage
prepaid, to each Holder, notice of the execution of any such agreement. Such
agreement shall provide for adjustments, which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 10. The
provisions of this Section 10.6 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
10.7 STATEMENT ON WARRANTS. Irrespective of any adjustments
in the Warrant Price or the number or kind of shares purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Warrants initially issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
11, be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall pay an amount in cash equal to the closing price for one
Common Share, as defined in Section 10.1.4, on the trading day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction.
SECTION 12. NO RIGHTS AS SHAREHOLDERS; NOTICES TO HOLDERS. Nothing
contained in this Agreement or in any of the Warrants shall be construed as
conferring upon the Holders or their transferees the right to vote or to
receive dividends or to consent or to receive notice as shareholders in
respect of any meeting of shareholders for the election of directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company. If however, at any time prior to the expiration of the Warrants and
prior to their exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its Common Shares or make any distribution (other than
a regular annual, semi-annual or quarterly cash dividend paid pursuant
to the Company's normal practice) to the holders of its Common Shares;
or
(b) the Company shall offer to the holders of its Common
Shares any additional Common Shares or securities convertible into or
exchangeable for Common Shares or any right to subscribe thereto; or
54
<PAGE> 55
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, transfer or
lease of all or substantially all of its property, assets and business
as an entirety) shall be proposed;
then in any one or more of said events the Company shall give notice in
writing of such event to the Holders as provided in Section 14 hereof, such
giving of notice to be completed at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the shareholders entitled to such dividend, distribution or subscription
rights, or for the determination of shareholders entitled to vote on such
proposed dissolution, liquidation or winding up. Such notice shall specify
such record date or the date of closing the transfer books, as the case may
be. Failure to publish or mail such notice or any defect therein or in the
publication or mailing thereof shall not affect the validity of any action
taken in connection with such dividend, distribution or subscription rights,
or such proposed dissolution, liquidation or winding up.
SECTION 13. RESTRICTIONS ON TRANSFERS; RIGHT OF FIRST OFFER.
13.1 RESTRICTIONS ON TRANSFERS OF WARRANTS AND WARRANT
SHARES. No Holder shall, directly or indirectly, by sale, gift, assignment,
pledge, hypothecation or other disposition, transfer the Warrants nor, prior
to the Expiration Date, the Warrant Shares, or any interest therein, except
as follows:
(a) provided that the transferee agrees in writing to be
bound by the terms of this Agreement, by GAIC to any of its
Affiliates or Associates (as defined in Rule 405 of Regulation C
under the Securities Act);
(b) subject to Section 13.2, in a single transaction or any
series of related transactions to a single purchaser or a group of
affiliated purchasers, which in the aggregate represent not more
than three percent (3%) of the outstanding Common Shares determined
on a fully diluted basis; provided, that such transfer will not
result in any person or group (within the meaning of Section
13(d)(3) of the Exchange Act) beneficially owning three percent
(3%) or more of the outstanding Common Shares, determined on a
fully diluted basis;
(c) provided that the transferee agrees in writing to be
bound by the terms of this Agreement, to any person or group
approved by the Company;
(d) to the Company or any of its Affiliates;
(e) pursuant to a merger or consolidation of the Company or
pursuant to a plan of liquidation of the Company, which (in each
such case) has been approved by the Board of Directors of the
Company;
55
<PAGE> 56
(f) in response to an offer to purchase or exchange for cash
or other consideration any Common Shares (i) which is made by or
on behalf of the Company or (ii) which is made by another person
or group and is approved by the Board of Directors of the Company
within the time such Board is required, pursuant to regulations
under the Exchange Act, to advise the shareholders of the Company
of such Board's position on such offer; or
(g) provided that the rights of the Holders under this
Agreement shall not transfer to the transferee of such securities:
(i) pursuant to a bona fide public offering registered under the
Securities Act (which shall be structured to distribute such shares
or other securities, if any, through an underwriter or otherwise
in such a manner as, to the extent practicable, will not result in
any person or group beneficially owning 9.9% or more of outstanding
Common Shares, determined on a fully diluted basis) or (ii)
subject to Section 13.2, in a transaction pursuant to Rule 144
under the Securities Act.
13.2 RIGHT OF FIRST OFFER. Prior to making any sale or
transfer of the Warrant or the Warrant Shares (other than a transfer pursuant
to subparagraph (a), (c), (d), (e), (f) or (g)(i) of Section 13.1), the
selling Holder (the "Selling Holder") will give the Company the opportunity
to purchase all, but not less than all, of the Warrants and Warrant Shares
held by the Selling Holder in the following manner (the "Right of First
Offer"):
13.2.1 The Selling Holder shall give notice (the
"Transfer Notice") to the Company in writing of such intention
specifying the number of Warrants or Warrant Shares proposed
to be sold or transferred, the proposed price therefor (the
"Transfer Consideration") and the other material terms upon
which such disposition is proposed to be made; provided, that,
--------
in the case of a proposed sale of Warrant Shares in an open
market transaction, the per share Transfer Consideration shall
be equal to the Fair Market Value per Common Share (as defined
in Section 13.2.3 hereof) on the date the Transfer Notice is
given.
13.2.2 The Company shall have the right, exercisable
by written notice given by the Company to the Selling Holder
within two business days after receipt of the Transfer Notice,
to purchase all, but not less than all, of the Warrants or
Warrant Shares held by the Selling Holder for cash in an
amount equivalent to the Transfer Consideration or, in the
case of a sale of Warrant Shares in an open market transaction,
the higher of the Transfer Consideration or the Fair Market
Value per Common Share (as defined in Section 13.2.3 hereof)
on the last trading day before the date of the closing
contemplated by Section 13.2.4 hereof.
13.2.3 For purposes of Sections 13.2.1 and 13.2.2
hereof, "Fair Market Value" means the last reported sales
price regular way or, in
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<PAGE> 57
case no reported sale takes place on the day the Transfer
Notice is given or the day before the closing occurs, as the
case may be, the average of the closing bid and asked prices
regular way for such day, in each case on the principal
national securities exchange on which the Common Shares are
listed or admitted to trading or, if not listed or admitted
to trading, the average of the closing bid and asked prices
of the Common Shares in the over-the-counter market as reported
by the NASDAQ National Market System or any comparable system.
13.2.4 If the Company exercises its Right of First
Offer hereunder, the closing of the purchase of the securities
shall take place within ten business days after the Company
gives notice of such exercise, which period of time shall be
extended, as necessary, in order to comply with applicable
securities and other applicable laws and regulations. Upon
exercise of its Right of First Offer, the Company and the
Selling Holder shall be legally obligated to consummate the
purchase contemplated thereby and shall use their best efforts
to secure any approvals required in connection therewith.
13.2.5 If the Company does not exercise its Right of
First Offer hereunder within the time specified for such
exercise, the Right of First Offer in this Section 13.2 shall
terminate as to all of the Warrants and Warrant Shares then
held by the Selling Holder.
13.2.6 In the event that the Company elects to
exercise any of its rights under this Section 13.2, the Company
may specify, prior to closing such purchase, another person as
its designee to purchase the securities to which such notice of
intention to exercise such rights relates. If the Company
designates another person as the purchaser pursuant to this
Section 13.2, the Company shall be legally obligated to complete
such purchase if its designee fails to do so.
13.2.7 Notwithstanding the foregoing, an aggregate of
300,000 Warrants and/or Warrant Shares may be sold by the
Holders in any 90 day period without compliance with the
provisions of this Section 13.2.
13.3 LEGEND. Each certificate representing the Warrants and
the Warrant Shares shall be endorsed with a legend giving notice that it is
subject to the restrictions of this Section 13.
SECTION 14. NOTICES. Any notice pursuant to this Agreement by any
Holder to the Company shall be in writing and shall be delivered in person or
by facsimile transmission or mailed first class, postage prepaid, to the
Company at its offices at 136 North Third Street, Hamilton, Ohio 45025;
Attention: President.
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<PAGE> 58
Any notice mailed pursuant to this Agreement by the Company to the
Holders shall be in writing and shall be delivered in person or mailed first
class, postage prepaid, to such Holders at their respective addresses on the
books of the Company.
Each party hereto may from time to time change the address to which
notices to it are to be delivered or mailed hereunder by notice to the other
party.
SECTION 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its successors and permitted assigns hereunder.
SECTION 16. APPLICABLE LAW. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the laws of
the State of Ohio, without giving effect to principles of conflict of laws.
SECTION 17. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Holders any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company and the Holders of the Warrants.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 19. CAPTIONS. The captions of the Sections and subsections of
this Agreement have been inserted for convenience only and shall have no
substantive effect.
58
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
OHIO CASUALTY CORPORATION
By: /s/ Lauren N. Patch
---------------------------------------
Title: President and CEO
------------------------------------
Attest:
/s/ Howard L. Sloneker III
- ------------------------------------
Title: Secretary
GREAT AMERICAN INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
------------------------------------------
Title: Senior Vice President
------------------------------------------
Attest:
/s/ Ronald C. Hayes
- ----------------------------------
Title: Assistant Secretary
59
<PAGE> 60
EXHIBIT A TO THE WARRANT AGREEMENT
OHIO CASUALTY CORPORATION
COMMON SHARE PURCHASE WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR UNLESS THE
ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE ISSUER, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
No. Warrants to Purchase
3,000,000 Common Shares
VOID AFTER 5:00 P.M. NEW YORK TIME, NOVEMBER 30, 2003
This certifies that, for value received, Great American Insurance
Company or its registered assigns (the "Holder"), is entitled to purchase from
Ohio Casualty Corporation, an Ohio corporation (the "Company") , at any time,
at the purchase price of $45.01 per share (the "Warrant Price"), the number of
Common Shares, par value, $.125 per share, of the Company ("Common Shares"),
shown above. The number of shares purchasable upon exercise of the Warrants
and the Warrant Price are subject to adjustment from time to time as set forth
in the Warrant Agreement referred to below.
This Warrant certificate is issued under and in accordance with a
Warrant Agreement dated as of December 1, 1998, between the Company and Great
American Insurance Company (the "Warrant Agreement") and is subject to the
terms and provisions contained in the Warrant Agreement, to all of which the
Holder of this Warrant certificate by acceptance hereof consents. A copy of
the Warrant Agreement may be obtained by the Holder hereof upon written
request to the Company.
Warrants may be exercised in whole or in part by presentation of this
Warrant certificate with the Purchase Form on the reverse side hereof duly
executed, which signature shall be guaranteed by a bank or trust company or a
broker or dealer which is a member of the National Association of Securities
Dealers, Inc., and simultaneous payment of the Warrant Price at the principal
office of the Company at 136 North Third Street, Hamilton, Ohio 45025;
Attention: Chief Financial Officer and Treasurer. Payment of such price
shall be made at the option of the Holder hereof in cash, by certified or bank
cashier's check drawn upon a bank chartered by the government of the United
States or any state thereof, outstanding Company debt at its face value (with
no regard to accrued interest) or any combination thereof. Pursuant to
Section 5.2 of the Warrant Agreement, the Warrant Price may also be paid by
surrendering Warrants in accordance with the Net Issuance method.
Upon any partial exercise of the Warrants evidenced by this Warrant
certificate, there shall be issued to the Holder hereof a new Warrant
certificate for the Common Shares as to which the Warrants evidenced by this
Warrant certificate shall not have been exercised. This Warrant certificate
may be exchanged at the office of the Company by surrender of this Warrant
certificate properly endorsed either separately or in combination with one or
more other Warrant certificates for one or more new Warrant certificates
evidencing the right of the Holder thereof to purchase the same aggregate
number of shares as were purchasable on exercise of the Warrants evidenced by
the Warrant certificate or certificates exchanged. No fractional shares will
be issued upon the exercise of any Warrants, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement. This Warrant
certificate is transferable at the office of the Company in the manner and
subject to the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant certificate as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
or to the transfer hereof on the books of the Company, any notice to the
contrary notwithstanding, and until such transfer on such books the Company
may treat the Holder thereof as the owner for all purposes.
Neither the Warrants nor this Warrant certificate entitle any Holder
hereof to any of the rights of a shareholder of the Company.
OHIO CASUALTY CORPORATION
Attest: /s/ Howard L. Sloneker III By: /s/ Lauren N. Patch
-------------------------- -------------------------------------
Secretary
Title: President and CEO
-------------------------------------
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<PAGE> 61
OHIO CASUALTY CORPORATION
PURCHASE FORM
(To be executed upon exercise of Warrants)
The undersigned hereby irrevocably elects to exercise the right to
purchase Common Shares evidenced by the within Warrant certificate,
----------
according to the terms and conditions thereof, and herewith makes payment of
the purchase price in full by tendering cash or certified or bank cashier's
check drawn upon a bank chartered by the government of the United States or
any state thereof or debt of the Company at its principal amount in the
aggregate amount of $ . The undersigned requests that
-----------------------
certificates for such Common Shares shall be issued in the name of
- -----------------------------------------------------------------------------
(Please print Name, Address and Social Security No.)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant certificate for the balance remaining of the
shares purchasable under the within Warrant certificate be issued in the name
of the undersigned Warrantholder or its assignee as below indicated and
delivered to the address stated below.
DATED: ,
-------------------- -------
Name of Warrantholder or Assignee:
------------------------------------------
(Please Print)
Address:
---------------------------------------------------------------------
- -----------------------------------------------------------------------------
Signature:
------------------------------------
Signature Guaranteed: (The above signature must correspond with the name as
written upon the face of this Warrant certificate in
every particular, without alteration or enlargement or
any change whatever, unless this Warrant certificate
has been assigned.)
- ----------------------------------------
ASSIGNMENT
(To be signed only upon assignment of Warrant certificate)
FOR VALUED RECEIVED, the undersigned hereby sells, assigns and
transfers unto
---------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
the within Warrant certificate, irrevocably constituting and appointing
, Attorney to transfer
- --------------------------------------------------------
said Warrant certificate on the books of the Company, with full power of
substitution in the premises.
DATED: ,
------------------------ -----
Signature:
----------------------------
Signature Guaranteed: (The above signature must correspond
with the name as written on the face of
this Warrant certificate in every
particular, without alteration or
enlargement or any change whatever.)
Exhibit 2(e)
Noncompetition and Referral Agreement,
dated December 1, 1998, among Ohio Casualty Corporation,
The Ohio Casualty Insurance Company and American Financial Group, Inc.
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<PAGE> 63
NONCOMPETITION AND REFERRAL AGREEMENT
-------------------------------------
THIS NONCOMPETITION AND REFERRAL AGREEMENT dated December 1, 1998 (this
"Agreement") is entered into by and among OHIO CASUALTY CORPORATION, an Ohio
corporation ("Ohio Casualty"), THE OHIO CASUALTY INSURANCE COMPANY, an Ohio
corporation (the "Buyer"), and AMERICAN FINANCIAL GROUP, INC., an Ohio
corporation ("AFG").
W I T N E S S E T H:
-------------------
WHEREAS, certain wholly-owned subsidiaries of Ohio Casualty and AFG
have entered into an Asset Purchase Agreement dated as of September 14, 1998
(the "Asset Purchase Agreement"), by and among Buyer, and Great American
Insurance Company, American National Fire Insurance Company, American Alliance
Insurance Company, Agricultural Excess and Surplus Insurance Company,
Agricultural Insurance Company, American Dynasty Surplus Lines Insurance
Company, American Spirit Insurance Company, Contemporary American Insurance
Company, Eagle American Insurance Company, Eden Park Insurance Company, Seven
Hills Insurance Company, Great Texas County Mutual Insurance Company and Great
American Lloyd's Insurance Company (collectively, the "Sellers") pursuant to
which Buyer, subject to the conditions thereof, will purchase certain assets
relating to the Commercial Lines Division (as hereinafter defined);
WHEREAS, Ohio Casualty wishes to secure AFG's agreement not to compete
with Buyer as set forth herein in order to enable Buyer successfully to
continue the Commercial Lines Division and AFG wishes to secure Ohio
Casualty's agreement not to appoint, solicit or provide quotes to certain
agents of the Commercial Lines Division as set forth herein and to provide
opportunities for AFG to access certain of Buyer's agents in order to enable
AFG and its Affiliates successfully to continue their other lines of business;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations contained herein, the parties hereto agree as
follows:
1. Definitions. Terms used herein without definition shall have
-----------
the meaning set forth in the Asset Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and the plural forms of
the terms defined):
"AFG Nonstandard Automobile Insurance Division" means the
---------------------------------------------
subsidiaries and divisions of AFG or any Affiliate thereof that underwrite or
assume automobile insurance policies for "nonstandard" risks.
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<PAGE> 64
"AFG Nonstandard Automobile Insurance Policy" means any
-------------------------------------------
automobile insurance policies for "nonstandard" risks written by the AFG
Nonstandard Automobile Insurance Division.
"AFG Personal Lines Division" means the subsidiaries and
---------------------------
divisions of AFG or any Affiliate thereof that underwrite or assume policies
relating to the personal lines business, including, but not limited to,
standard and preferred personal automobile insurance, homeowners insurance,
boat owners insurance and personal umbrella insurance.
"AFG Personal Lines Policy" means any personal lines policy
-------------------------
written by the AFG Personal Lines Division.
"AFG Specialty Division Restricted Lines" means the following
---------------------------------------
specialty products written by subsidiaries and divisions of AFG or any
Affiliate: crop hail/MPCI insurance, ocean marine insurance, equine
insurance, flood mapping insurance, directors' and officers' liability
insurance (excluding lending institutions), legal malpractice insurance,
aviation insurance, export credit insurance, excess and surplus insurance,
business of the type written by Sellers' Specialized Markets business unit and
lending institution insurance products, such as collateral protection
insurance, lessor's contingent and excess liability insurance, automobile
"gap" insurance, automobile residual value insurance, job loss and life of
loan insurance.
"AFG Specialty Policy" means any policy written by AFG
--------------------
Specialty Units excluding policies and renewals of policies listed on Schedule
3.5 of the Asset Purchase Agreement.
"AFG Specialty Units" means Mid-Continent Casualty Company,
-------------------
American Empire Surplus Lines Insurance Company, Republic Indemnity Company of
America or any specialty unit or subsidiary of AFG or any Affiliate thereof
that offers specialty package policies of insurance including, but not limited
to, umbrella, excess, commercial automobile, commercial inland marine
insurance and bond products and workers' compensation policies to a
specialized customer focus group or as part of program business.
"Commercial Lines Agent" means any licensed insurance agent or
----------------------
broker listed on Schedule 3.18 of the Asset Purchase Agreement.
"Commercial Lines Division" means the division of the Sellers
-------------------------
(or any of them) that underwrites or assumes policies relating to the Business
(as defined in the Asset Purchase Agreement) and which is being sold to the
Buyer pursuant to the terms of the Asset Purchase Agreement.
64
<PAGE> 65
"Subject Premiums" means the gross annualized premiums
----------------
(measured on each of the anniversary dates of this Agreement) for all
specialty lines and personal lines policies written during the Noncompete
Period (as defined below) and (i) referred to in Section 2(c) hereof, or (ii)
which replaced or cancelled the policies referred to in Sections 2(b), 2(c) or
2(d) hereof.
"Transfer Payment" means the amount calculated in accordance
-----------------
with Section 2(g) hereof.
2. Noncompetition and Business Referral Covenants. Unless this
----------------------------------------------
Agreement is earlier terminated as provided herein, during the period of time
commencing on the Closing Date and ending on the fifth (5th) anniversary of
such date (the "Noncompete Period"), AFG and Buyer agree as follows:
(a) Buyer agrees, on behalf of Buyer and Buyer's present
and future Affiliates, not to, directly or indirectly, appoint, solicit or
provide quotes to any Commercial Lines Agent with respect to any type of
insurance currently included in the AFG Specialty Division Restricted Lines.
(b) In circumstances where a Commercial Lines Agent is
appointed to sell AFG Specialty Policies, Buyer agrees, on behalf of Buyer and
Buyer's present and future Affiliates not to, directly or indirectly, appoint,
---
solicit, or provide quotes to any such Commercial Lines Agent if such
solicitation would result in the cancellation and/or replacement of an
existing AFG Specialty Policy with a policy written by Buyer or Buyer's
Affiliate. Notwithstanding the foregoing, if such agent requires the Buyer to
provide such policy as a condition to continuing his/her relationship as a
Commercial Lines Agent, Buyer may provide such specialty policy to the agent.
The gross annualized written or renewal premiums of all such policies shall
be deemed Subject Premiums.
(c)(i) In circumstances where a Commercial Lines Agent is
appointed to sell AFG Personal Lines Policies, is not appointed to sell Buyer
or Buyer's Affiliates personal lines policies and is listed on Schedule
2(c)(i) hereof, Buyer agrees, on behalf of Buyer and Buyer's present and
future Affiliates, not to, directly or indirectly, appoint, solicit, or
provide quotes to any such Commercial Lines Agent with respect to any personal
lines policy of the type written by the AFG Personal Lines Division.
Notwithstanding the foregoing, if such agent requires the Buyer to provide
such policy as a condition to continuing his/her relationship as a Commercial
Lines Agent, Buyer may provide such personal lines policy to the agent. The
gross annualized written or renewal premiums of all such policies shall be
deemed Subject Premiums.
(ii) In circumstances where a Commercial Lines Agent is
appointed to sell AFG Personal Lines Policies, is not appointed to sell Buyer
or Buyer's Affiliates personal lines policies and is listed on Schedule
2(c)(ii) hereof, Buyer agrees, on behalf of Buyer and Buyer's present and
future Affiliates not to, directly
65
<PAGE> 66
or indirectly, solicit or provide quotes to any such Commercial Lines Agent
if such solicitation would result in thecancellation and/or replacement of an
existing AFG Personal Lines Policy with a policy written by Buyer or Buyer's
Affiliates. Notwithstanding the foregoing, if such agent requires the Buyer
to provide such policy as a condition to continuing his/her relationship as
a Commercial Lines Agent, Buyer may provide such personal lines policy to
the agent, and the gross annualized written or renewal premiums of all such
policies shall be deemed Subject Premiums. Additionally, Buyer or Buyer's
Affiliates may solicit or provide quotes to any agent listed on Schedule
2(c)(ii) with respect to personal lines policies that would not result in
the cancellation and/or replacement of an existing AFG Personal Lines
Policy ("Non-replacement Policies").
(d) In circumstances where a Commercial Lines Agent is
appointed to sell AFG Personal Lines Policies and is also appointed to sell
Buyer or Buyer's Affiliates personal lines policies (which agents are listed
on Schedule 2(d) hereof), Buyer agrees, on behalf of Buyer and Buyer's present
and future Affiliates not to, directly or indirectly, solicit or provide
quotes to any such Commercial Lines Agent if such solicitation would result in
the cancellation and/or replacement of an existing AFG Personal Lines Policy
with a policy written by Buyer or Buyer's Affiliate. Notwithstanding the
foregoing, if such agent requires the Buyer to provide such policy as a
condition to continuing his/her relationship as a Commercial Lines Agent,
Buyer may provide such personal lines policy to the agent. The gross
annualized written or renewal premiums of all such policies shall be deemed
Subject Premiums.
(e) AFG agrees, on behalf of AFG and AFG's present and
future Affiliates, not to, directly or indirectly solicit or provide quotes to
any Commercial Lines Agent relating to the Commercial Lines Division products
unless (i) an AFG Specialty Unit currently utilizes the services of such
Commercial Lines Agent as an agent and (ii) the type of business is included
in the insurance offered by such AFG Specialty Unit; provided, however, that
AFG and its present and future Affiliates may provide the type of insurance
included in the Commercial Lines Division to or through financial
institutions, direct marketing and U.S. Insurance Services, Inc.; provided,
however, that with respect to the direct marketing or offering of Commercial
Lines Division products to or through financial institutions not affiliated
with Provident Financial Group, Inc., or through U.S. Insurance Services, Inc.
(i) no solicitations or quotes shall be made on behalf of, nor policies shall
be written by Great American Insurance Company ("GAIC"), nor shall any other
Affiliate of GAIC write, solicit or quote a policy to the extent that any such
activities utilize GAIC, or the words "Great American" in marketing materials;
and (ii) quotes may only be provided to agents associated with the largest
fifteen nationally recognized insurance brokerage firms or agents not
appointed by the Commercial Lines Division. Nothing in the foregoing
restrictions, however, shall prohibit the participation of GAIC in pooling
arrangements among GAIC and certain of its Affiliates or allocations of
financial risk by GAIC under reinsurance agreements
66
<PAGE> 67
with Affiliates. Notwithstanding the foregoing, AFG agrees, on behalf of AFG
and its present and future Affiliates, not to solicit or provide quotes on
the aforementioned products if such solicitation would result in the
cancellation and/or replacement of any existing policy written by Buyer.
(f) Except as set forth herein, nothing shall prevent the
Buyer from continuing any of its present agency relationships or cause it to
terminate any existing agency relationship.
(g) In the event the Buyer or any Affiliate thereof
provides policies pursuant to Sections 2(b), 2(c) or 2(d) hereof, AFG shall be
entitled to receive annually a Transfer Payment determined as follows: If
the Subject Premiums are (i) less than One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00), the Buyer shall make no payment to AFG; (ii)
greater than One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) but less than Five Million and 00/100 Dollars ($5,000,000.00),
the Buyer shall make a payment to AFG equal to forty percent (40%) of the
amount of the Subject Premiums in excess of One Million Five Hundred Thousand
and 00/100 Dollars ($1,500,000.00); (iii) greater than Five Million and 00/100
Dollars ($5,000,000.00), Buyer shall make a payment to AFG equal to one
hundred percent (100%) of the Subject Premiums in excess of Five Million and
00/100 Dollars ($5,000,000.00), plus One Million Four Hundred Thousand and
00/100 Dollars ($1,400,000.00). The Transfer Payment otherwise due to AFG
with respect to any year shall be reduced by the cumulative amount of prior
Transfer Payments made to AFG. However, in no case shall AFG refund any
Transfer Payments to Buyer.
(h) On or before the thirtieth (30th) day after the first
(1st) anniversary of the execution of this Agreement and annually thereafter,
Buyer shall prepare and deliver to AFG a written report, setting forth a list
of all Subject Premiums as of such anniversary date and a calculation of the
amount, if any, of the Transfer Payment, Buyer is required to pay to AFG.
Buyer shall deliver or make available to AFG upon request copies of all
business records used as a basis for preparing the report. In addition, Buyer
shall provide AFG and its representatives reasonable access to such
information. AFG and its representatives shall have thirty (30) days to
review the report and all supporting papers and documentation. If, at the end
of such period, AFG and Buyer agree upon the amount to be paid to AFG, the
report shall be deemed final and binding on the parties. In the event AFG and
Buyer are unable to agree upon the amount to be paid, the matter shall be
submitted to the Neutral Auditors. The Neutral Auditors' determination shall
be made within thirty (30) days after submission to such auditors, shall be
set forth in a written statement delivered to Buyer and AFG and shall be
final, binding and conclusive. All fees and expenses relating to the
foregoing shall be borne equally by AFG and Buyer. In the event Buyer is
required to make payments under Section 2, such payments shall be made by
Buyer within five (5) business days of the final determination of the amount
of such payment.
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(i) Buyer agrees, on behalf of Buyer and Buyer's present
and future Affiliates, to (i) include in its marketing publications directed
at Buyer's agents information relating to AFG's Specialty Division Restricted
Lines and Nonstandard Automobile Insurance Policies (collectively "AFG
Insurance Products"), and (ii) from time to time, provide AFG's designated
representatives with an opportunity to meet and discuss with Buyer's agents
AFG's Insurance Products, and (iii) assist AFG in appointing Buyer's agents to
offer AFG Insurance Products. The aforementioned referral efforts shall be
administered through the appointment by each of Buyer and AFG of a
representative, which representatives shall meet as necessary to coordinate
and implement acceptable referral initiatives.
(j) As consideration for the referral of AFG Insurance
Products to agents of Buyer, AFG agrees to pay Buyer, for those of Buyer's
agents who are successfully appointed by AFG in accordance with AFG's
established appointment standards, a fee equal to two percent (2%) of the
gross premiums on all AFG Insurance Products newly written by such agents
during a two (2) year period commencing on the date hereof (the "Override
Payment"). The Override Payments shall be calculated on a monthly basis and
paid to Buyer within fourteen (14) days of the end of each calendar month. On
or before the thirtieth (30th) day after the second (2nd) anniversary of the
date of this Agreement, AFG shall also prepare and deliver to Buyer a written
report, setting forth a calculation of the total Override Payments which AFG
was required to pay to Buyer. AFG shall deliver and make available to Buyer
upon request, copies of all business records used as a basis for preparing the
calculation. Buyer and its representatives shall have thirty (30) days to
review the calculation and all supporting papers and documentation. If, at
the end of such period, the parties agree upon the amount to be paid to Buyer,
the calculation shall be deemed final and binding on the parties. In the
event that the parties are unable to agree upon the amount to be paid, the
matter shall be submitted to Neutral Auditors. The Neutral Auditors
determination shall be made consistent with paragraph 2(h) hereof.
(k) Buyer agrees to include premiums on AFG Insurance
Products as credit toward Buyer's agents trips and key agent programs.
3. Right of First Refusal.
----------------------
(a) During the period of time commencing on the execution
date of the Asset Purchase Agreement and ending on the second (2nd)
anniversary of such date, in the event AFG desires to sell the Sellers'
personal lines division to a third party, AFG shall first notify Buyer in
writing of its intent to sell (the "Right of First Refusal"). Buyer shall
have twenty (20) business days to notify AFG of its offer to acquire such
division and the terms and conditions of such offer. Thereafter, AFG and
Buyer shall negotiate in good faith the terms of a purchase and sale agreement
for a period of thirty (30) days. If the parties are unable to reach an
agreement
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<PAGE> 69
within such thirty (30) day period, AFG shall have the right to
offer the Sellers' personal lines division to any third party on terms at
least as favorable to AFG as those terms offered by Buyer, if any. In the
event AFG or Sellers do not enter into a written agreement to sell the
division within one hundred eighty (180) days after the date of the notice to
Buyer, then the Right of First Refusal shall again be applicable prior to any
proposed sale of the Sellers' personal lines division.
(b) In the event the Sellers' personal lines division is
sold to a third party, AFG agrees to use its reasonable best efforts to
require such purchaser to comply with the terms and conditions of this
Agreement with the exception of Section 3 hereof, unless any of the Commercial
Lines Agents act as agent for the purchaser in the type of business offered by
the Commercial Lines Division.
4. Non-Solicitation/Hire Covenants. During the period of time
-------------------------------
commencing on the Closing Date and ending on the first (1st) anniversary of
such date, AFG and Buyer agree as follows:
(a) AFG agrees, on behalf of AFG and AFG's present and
future Affiliates, not to, directly or indirectly, solicit or hire any person
who is listed on Schedule 5.9.1 of the Asset Purchase Agreement, unless such
person has been terminated by the Buyer.
(b) Buyer agrees, on behalf of Buyer and Buyer's present
and future Affiliates, not to, directly or indirectly, solicit or hire any
person who was an employee of any of the Sellers on the Closing Date and not
listed on Schedule 5.9.1 of the Asset Purchase Agreement, unless such person
has been terminated by Sellers.
5. Reasonable Restrictions. Each party recognizes, agrees and
-----------------------
represents that the parties would not have entered into the Asset Purchase
Agreement unless the other party hereto agreed to the restrictions contained
herein and that each party is relying on the agreements of the other party
contained in this Agreement in entering into (or permitting its Affiliates to
enter into) the Asset Purchase Agreement. Each party represents that the
consideration paid and benefits received pursuant to and under the Asset
Purchase Agreement constitutes significant and valuable consideration for the
agreements made hereunder. Each party has read and considered the provisions
of this Agreement and, having done so, agrees, states and covenants that the
restrictions on competition set forth herein are fair and reasonable as to
time and scope of activities to be restrained, and are reasonably required for
the protection of the goodwill and other business interests of each party. In
the event a court of competent jurisdiction determines as a matter of law that
any of the terms of this Agreement are unreasonable or overbroad, the parties
expressly allow such court to reform this Agreement to the extent necessary to
make it reasonable as a matter of law and to enforce it as so reformed.
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6. Remedies. Each party acknowledges that if any party violates
--------
or threatens to violate any of the provisions of this Agreement (the
"Violating Party"), the non-violating party (the "Non-Violating Party") will
not have an adequate remedy at law. In such event, the Non-Violating Party
shall have the right, in addition to any other rights that may be available to
them and without the posting of any bond or other security, to obtain in any
court of competent jurisdiction injunctive relief to restrain any violation or
threatened violation by the Violating Party of any provision of this Agreement
or to compel specific performance by the Violating Party of one or more of the
Violating Party's obligations under this Agreement. The seeking or obtaining
of such injunctive relief shall not foreclose or in any way limit the right of
the Non-Violating Party and its Affiliates thereof to obtain monetary relief
against the Violating Party for any damage to the Non-Violating Party or any
Affiliate thereof that may result from any breach by the Violating Party of
any provision of this Agreement or to compel specific performance of one or
more of the Violating Party's obligations under this Agreement.
7. Miscellaneous.
-------------
(a) Severability. The unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(b) Waivers. No delay or omission by a party in exercising
-------
any right or remedy of such party under this Agreement shall operate as
a waiver of that or any other right or remedy. A waiver by a party on
any one occasion of any particular right shall be effective only in
that particular instance and shall not be construed as a waiver of that
or any other right on any other occasion.
(c) Amendment of this Agreement. This Agreement may be
---------------------------
amended only by an amendment hereto in writing that is executed by Ohio
Casualty and AFG.
(d) Headings for Convenience Only. The headings contained
-----------------------------
in this Agreement are intended solely for the convenience of the
parties to this Agreement and shall not affect their rights or
remedies.
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(e) Notices. All notices and other communications required
or permitted to be delivered pursuant to any provision of this
Agreement shall be in writing and addressed as follows:
(i) If to Ohio Casualty, to:
Ohio Casualty Corporation
136 North Third Street
Hamilton, Ohio 45025
Attention: Lauren Patch
Telephone: (513) 867-3854
Facsimile: (513) 867-3969
With a required copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
Attention: James A. Yano, Esq.
Telephone: (614) 464-6473
Facsimile: (614) 464-6350
(ii) If to AFG, to:
American Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attention: James C. Kennedy, Vice President
Telephone: (513) 579-2538
Facsimile: (513) 579-0108
With a required copy to:
Keating, Muething & Klekamp, P.L.L.
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Edward E. Steiner
Telephone: (513) 579-6468
Facsimile: (513) 579-6957
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The address of either party set forth above may be changed by such party by
delivering notice of such change to the other party to this Agreement. Any
notice mailed shall be deemed to have been given and received on the third
business day following the day of deposit in the United States mail.
(f) Assignments. The rights and obligations under this
Agreement of AFG and Ohio Casualty may not be assigned, except that
Ohio Casualty may, at its option, assign one or more of its rights or
obligations under this Agreement to any of its subsidiaries or
affiliates, or in connection with a transfer of all or substantially
all of the assets or stock of Ohio Casualty or a merger or
consolidation of Ohio Casualty with and into another corporation or
other entity, but in each case Ohio Casualty shall remain fully
responsible and liable to AFG for the full and complete performance
of Ohio Casualty's obligations hereunder.
(g) Applicability of Agreement to Certain Future Affiliates
-------------------------------------------------------
of Ohio Casualty. Anything contained in this Agreement to the
----------------
contrary notwithstanding, in the event that, during the term of this
Agreement, Ohio Casualty or any Affiliate of Ohio Casualty acquires
an insurance company which sells insurance products of the type sold
by the AFG Specialty Units or AFG Personal Lines Division, such
acquired company will not be subject to the restrictions contained
in Sections 2(a), 2(b), 2(c) and 2(d), but during the remaining term
of this Agreement such acquired company will not newly appoint any
AFG Specialty Unit agent who is also a Commercial Lines Agent as
agent or broker of such acquired company with respect to (i)
specialty lines business not engaged in by Ohio Casualty or any
Affiliate of Ohio Casualty at the date of the acquisition of such
company or (ii) the business of the AFG Personal Lines Division.
(h) Applicability of Agreement to Certain Future
--------------------------------------------
Affiliates of AFG. Anything contained in this Agreement to the
-----------------
contrary notwithstanding, in the event that, during the term of this
Agreement, AFG or any Affiliate of AFG acquires an insurance company
which sells insurance products of the type sold by the Commercial
Lines Division, such acquired company will not be subject to the
restrictions contained in Section 2(e), but such acquired company
will not newly appoint any Commercial Lines Agent or broker of such
acquired company with respect to the Business of the Commercial
Lines Division during the remaining term of this Agreement.
(i) Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the internal substantive laws of
the State of Ohio.
(j) Other Agreements. The parties hereto expressly agree
----------------
that the provisions and covenants of this Agreement shall be in
addition to and shall
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not supersede or replace any similar provisions
or covenants in any other contracts or agreements between the parties
hereto, including, without limitation, a letter agreement addressed
to Richard B. Kelly, on behalf of Ohio Casualty, from Keith A.
Jensen, on behalf of AFG, dated October 12, 1998.
(k) Counterparts. This Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 74
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AMERICAN FINANCIAL GROUP, INC.
By: /s/ James C. Kennedy
------------------------------------
Name: James C. Kennedy
Title: Vice President and Deputy
General Counsel
OHIO CASUALTY CORPORATION
By: /s/ Lauren N. Patch
------------------------------------
Name: Lauren N. Patch
Title: President
THE OHIO CASUALTY INSURANCE COMPANY
By: /s/ Lauren N. Patch
------------------------------------
Name: Lauren N. Patch
Title: President
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<PAGE> 75
Exhibit 2(f)
Information Systems Agreement,
dated December 1, 1998, among The Ohio Casualty Insurance Company,
Great American Insurance Company and the other Sellers named therein
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<PAGE> 76
INFORMATION SYSTEMS AGREEMENT
-----------------------------
This Information Systems Agreement (this "Agreement") is made this 1st
day of December, 1998 by and among GREAT AMERICAN INSURANCE COMPANY, AMERICAN
NATIONAL FIRE INSURANCE COMPANY, AGRICULTURAL EXCESS AND SURPLUS INSURANCE
COMPANY, AGRICULTURAL INSURANCE COMPANY, AMERICAN ALLIANCE INSURANCE COMPANY,
AMERICAN DYNASTY SURPLUS LINES INSURANCE COMPANY, AMERICAN SPIRIT INSURANCE
COMPANY, CONTEMPORARY AMERICAN INSURANCE COMPANY, EAGLE AMERICAN INSURANCE
COMPANY, EDEN PARK INSURANCE COMPANY, GREAT AMERICAN LLOYD'S INSURANCE
COMPANY, GREAT TEXAS COUNTY MUTUAL INSURANCE COMPANY and SEVEN HILLS INSURANCE
COMPANY (collectively "Sellers") and THE OHIO CASUALTY INSURANCE COMPANY
("Customer").
WITNESSETH:
----------
WHEREAS, Sellers and Customer are parties to an Asset Purchase
Agreement dated as of September 14, 1998 (as from time to time amended, the
"Asset Purchase Agreement"), pursuant to which Customer is acquiring certain
assets and assuming certain liabilities related to the commercial line of
insurance of the Sellers described in the Asset Purchase Agreement;
WHEREAS, in connection with the execution and performance of the Asset
Purchase Agreement, Customer will license certain records, data, files, input
materials, reports, forms and other data (the "Licensed Database") from the
Sellers on the terms provided in that certain Database License Agreement dated
as of the date of this Agreement (the "Database License Agreement");
WHEREAS, Customer has agreed that Sellers will provide certain
information services and communication services to Customer and its Affiliates
on systems maintained and operated by Sellers necessary for the operation and
maintenance of the Licensed Database; and
WHEREAS, Sellers have agreed to provide such services on the terms and
conditions set forth in this Agreement, and the Sellers have agreed to provide
such services on such terms and conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth in this Agreement, the parties, intending to be legally
bound, hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein and not
-----------
otherwise defined in this Agreement shall have the meaning given to them in
the Asset Purchase Agreement.
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<PAGE> 77
"Additional Resources" means any Equipment, Software or personnel
(other than those already engaged in the delivery of Services) necessary for
the performance of Supplemental Services which have been requested by Customer
pursuant to Section 2.2 of this Agreement.
"Assets" means all rights, titles, franchises, and interests in and to
every species of property, real, personal and mixed, tangible and intangible,
and things in action thereunto belonging, including, without limitation, cash
and cash equivalents, securities (including, without limitation, exempted
securities under the Securities Act), receivables, recoverables (from
reinsurance and otherwise), deposits and advances, loans, agent balances, real
property (together with buildings, structures and the improvements thereon,
fixtures contained therein and appurtenances thereto and easements and other
rights relating thereto), machinery, equipment, furniture, fixtures, leasehold
improvements, vehicles and other assets or property, leases, licenses,
permits, approvals, authorizations, joint venture agreements, Contracts or
commitments, whether written or oral, policy forms, training materials,
underwriting manuals, lists of policyholders and agents, processes, trade
secrets, know-how, Software, computer programs, and source codes, protected
formulae, all other intellectual property, research, prepaid expense, books of
account, records, files, invoices, data, rights, claims and privileges and any
other assets whatsoever.
"Basic Costs" has the meaning set forth in Section 7.1.2 of this
Agreement.
"Basic Services" means and includes any and all of the computer
processing and communication services used and necessary by the Sellers in
connection with the conduct of the Business in the ordinary course of business
as of the date of this Agreement including, without limitation (a) all on-line
and batch processing of Data, printing services, tape storage, electronic and
telephonic communications and network services, the retention of Data, and
consulting by the Sellers' Employees and agents (including ongoing
coordination and assistance with the implementation of application software),
(b) reasonable access to, and the ability to copy, any and all paper records
relating to any of the Services, (c) maintenance of the system on a continuing
basis to ensure that the information system provided hereunder remains legally
compliant and otherwise the functional equivalent to the information system
which is in place as of the date of this Agreement, including but not limited
to systems changes to address requests of or specified by state insurance
departments, the NAIC, the NCCI and/or ISO, and (d) such other services and
activities more particularly described in Schedule 2.1 attached to this
Agreement.
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"Confidential Matters" has the meaning set forth in Section 9 of this
Agreement.
"Contract" means a contract, indenture, bond, note, mortgage, deed of
trust, lease, agreement or commitment, whether written or oral, including,
without limitation, any contract of insurance, contract of reinsurance,
fidelity bond or funding agreement relating to the Data.
"Customer Software" means and includes (a) Software programs hereafter
installed on Equipment which are used in connection with the Business and
which have been developed by or are otherwise owned or licensed by Customer,
(b) those additional Software programs from time to time developed or acquired
or licensed by Customer and installed by the Sellers for use pursuant to this
Agreement and (c) all Enhancements of any of the foregoing.
"Damages and Claims" means all losses, claims, damages, costs,
expenses, liabilities and judgments, including, without limitation, court
costs, expenses and attorneys and experts fees reasonably incurred.
"Data" means the records, data, files, input materials, reports, forms
and other data owned by Sellers and material to the conduct of the Business.
"Documentation" means any and all written, printed and computer sourced
materials, books and records, including but not limited to training manuals,
installation and operating proceedings, job control (JCL), program and system
diagrams and record and file layouts.
"Employee" means any individual who is an employee of another Person.
"Enhancements" means, with respect to any Software, any and all
corrections, modifications, upgrades or enhancements which are implemented or
installed.
"Equipment" means such computer hardware, telecommunications equipment
and other related equipment and materials (including storage media of any
nature, and also including other business equipment which may not store any
Data, but which nonetheless is integral to the performance of Services
hereunder, such as mailing and inserting equipment, copy machines or facsimile
machines) utilized by the Sellers from time to time to provide Services to
Customer under this Agreement or in connection with the provision of such
Services.
"Initial Term" has the meaning set forth in Section 10.1 of this
Agreement.
"Knowledge" means, unless the context otherwise requires, (a) actual
knowledge of the event or circumstance in question by an Employee or agent of
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a party to whom such knowledge is ascribed, or (b) reason to know of the event
or circumstance in question by an Employee or agent of a party to whom such
knowledge is ascribed if such Employee or agent would have obtained actual
knowledge of the event or circumstance in question in the reasonable exercise
of such Person's duties in the ordinary course of business.
"Law" means any law, ordinance, rule or regulation enacted or
promulgated, or any Order issued or rendered by, any Governmental Entity.
"Licensed Software" means and includes (a) any Software which is
licensed to any of the Sellers or any of its or their Affiliates and which is
used and necessary in connection with the conduct of the Business in the
ordinary course of business and otherwise to perform any of the Services as of
the date of this Agreement or at any time during the Term and (b) all
Enhancements of any of the foregoing.
"Network Costs" has the meaning set forth in Section 7.1.4 of this
Agreement.
"Network Services" means and includes any and all network services used
and necessary by the Sellers in connection with the conduct of the Business in
the ordinary course of Business as of the date of this Agreement including,
without limitation (a) local area network, servers, hubs, gateways, routers
and wide area network and (b) such other services and activities set forth on
Schedule 7.1.4 of this Agreement.
"Performance Records" means those records and other materials which
reflect the performance and functional operating history of the Equipment and
Software used to provide the Services which are described on Schedule 3.1.1
attached to this Agreement, examples of which have been previously provided by
the Sellers to Customer.
"Renewal Term" has the meaning set forth in Section 10.2 of this
Agreement.
"Results" has the meaning set forth in Section 8.1 of this Agreement.
"Retention Policies" means and includes (a) those written record
retention policies for current and archived Data which are described on
Schedule 1.5 attached to this Agreement, (b) those additional operating
procedures and practices currently employed to protect Data, Documentation,
Software and other records relating to the Business from unauthorized access,
alteration or loss which are specified on Schedule DRP attached to this
Agreement and (c) those further operating procedures and policies (including
amendments or substitutions for any of the foregoing) relating to the
retention and protection of Data and other records which are from time to time
established pursuant to Section 2.2 of this Agreement.
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"Sellers' Software" means and includes the Software programs owned by
any of the Sellers, used and necessary in the conduct of the Business and
identified in Schedule 3.13 of the Asset Purchase Agreement.
"Services" means and includes the Basic Services, the Supplemental
Services and the Transition Services.
"Software", whether used separately or as part of any other defined
term, means any program, spreadsheet or algorithm, whether in source code or
object code, and in whatever form or media stored, used in connection with the
computer processing and storage of Data.
"Supplemental Costs" has the meaning set forth in Section 7.2 of this
Agreement.
"Supplemental Services" has the meaning set forth in Section 2.2 of
this Agreement.
"Term" means the period beginning on the date of this Agreement and
continuing until the Termination Date.
"Termination Date" means the date which is the earlier of (a) the
expiration of the Initial Term (or any Renewal Term under Section 10.2 of this
Agreement) or (b) the effective date of termination specified in any notice of
termination delivered pursuant to Section 10 of this Agreement.
"Transition Procedures" has the meaning set forth in Section 11.1.1 of
this Agreement.
"Transition Services" has the meaning set forth in Section 11.1.3 of
this Agreement.
"Year 2000 Compliant" means that the System (meaning all Sellers'
Software, Licensed Software and other Software provided by Sellers hereunder,
and all Services and Equipment provided hereunder) and the computer hardware
and software acquired by Customer from Seller is designed to be used prior to,
during and after the calendar year 2000, and the System and such hardware and
software during each such time period will, in all material respects,
accurately receive, provide and process date/time data (including but not
limited to calculating, comparing and sequencing) from, into and between the
20th and 21st centuries, including the years 1999 and 2000, and leap-year
calculations, and will not malfunction, cease to function, or provide invalid
or incorrect results as a result of date/time data, except where such
malfunction or failure would not have a material adverse effect on the
Business, and to the extent that Customer's Software, other
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Software and computer hardware provided by the Customer, used in connection
with the System, properly exchanges date/time data with the System.
Section 2. The Services. During the Term, subject to the
------------
remaining terms and conditions of this Agreement, the Sellers shall perform
and provide to Customer and its Affiliates all of the Basic Services, together
with such Supplemental Services on which the parties agree pursuant to Section
2.2 of this Agreement and the Transition Services to be provided pursuant to
Section 11 of this Agreement.
2.1 Basic Services. The Sellers shall perform and provide
--------------
to Customer all of the Basic Services in a manner which shall at all times be
consistent with the manner in which such Basic Services have been performed by
and between the Sellers and their Affiliates prior to the date of this
Agreement, which shall enable Customer to own and operate the Business in the
ordinary course of business (which obligations of Sellers shall include,
without limitation, causing the Business to be Year 2000 Compliant). In
furtherance, and not in limitation of the foregoing:
2.1.1 (1) the Sellers shall store and retain all Data
and Documentation in strict compliance with (i) the Retention Policies, and
(ii) those additional procedures and policies, if any, either (A) otherwise
implemented by the Sellers and their Affiliates in the ordinary course of
their business, in order to avoid unauthorized access to, or the alteration,
destruction or other loss of, any Data (acting in good faith in determining,
in the exercise of its reasonable judgment, whether such additional procedures
and policies adversely affect Customer) and Customer does not object within a
reasonable period, or (B) agreed upon by the parties pursuant to Section 2.2
of this Agreement.
(2) In the event the Sellers have Knowledge of any
incident which occurs (other than in accordance with the
specific written instructions of Customer) involving a failure
to comply with the procedures and policies referred to in this
Section 2.1.1 or which otherwise involves, or is believed to
involve, unauthorized access or disclosure, alteration,
destruction or other loss of any Data (whether in violation of
the obligations of Section 9 or otherwise), the Sellers shall
provide reasonable notice thereof to the Customer as the
circumstances may dictate, and assist and cooperate with
Customer in diligently investigating the circumstances relating
to such incident and shall implement such (i) temporary
procedures, and (ii) such additional related security
procedures, at a cost equal to the actual costs and expenses
incurred by the Sellers, in order to minimize any related
damage sustained or sustainable by Customer.
2.1.2 The Sellers shall provide and maintain during
the Term all Equipment, Software (including Documentation), personnel and
related facilities
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and materials (other than those which are the property, or are otherwise
under the custody or control, of Customer) required for the performance
of the Services in accordance with the requirements of this Agreement.
Customer acknowledges that the Equipment designated on Schedule 2.1.2
attached to this Agreement, located at 580 Walnut Street, Cincinnati,
Ohio 45202, will be maintained by the Sellers as a part of the Basic Services.
2.1.3 Prior to August 31, 1999, Sellers shall perform
System tests, and provide System test results, as may be mutually agreed upon
with the Customer, to demonstrate that the System is Year 2000 Compliant.
2.2 Supplemental Services. In furtherance of the Business,
---------------------
Customer may request during the Term, in addition to the Basic Services,
additional computer processing or communication services which Customer
desires to be performed by the Sellers pursuant to the terms of this
Agreement. All Services requested by Customer (including, without limitation,
those of a nature described on Schedule 2.2 as of the date of this Agreement)
which the Sellers perform in accordance with this Section 2.2 shall be
"Supplemental Services". In the event Customer wishes to request the Sellers
to perform and provide additional Supplemental Services, Customer and the
Sellers shall follow the following procedures:
2.2.1 Customer shall notify the Sellers of the
desired Supplemental Services and shall cooperate with the Sellers in defining
the specifications for such Supplemental Services (including any performance
measurements or criteria which might be applicable) and developing an
assessment of the Sellers' ability to provide such Supplemental Services in
the absence of Additional Resources. In making any assessment of the necessity
for Additional Resources, the Sellers will work in good faith to perform the
requested Supplemental Services with no Additional Resources while being
entitled to take into account in a commercially reasonable manner both the
existing and foreseeable operating requirements of the Sellers and their
Affiliates.
2.2.2 Customer and the Sellers shall proceed in good
faith in order that such notification and cooperative activities occur on a
timely basis, consistent with reasonable expectations as to the level of
effort required to implement the requested Supplemental Services. In the event
Customer and the Sellers agree that such Supplemental Services can be
performed without Additional Resources, the Sellers shall proceed in good
faith in cooperation with Customer to provide such Supplemental Services as
soon as reasonably practicable.
2.2.3 Thereafter, should Customer wish to receive the
requested Supplemental Services (in accordance with any modified terms
subsequently agreed upon by the parties), the Sellers shall undertake to
acquire
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and deliver the agreed upon Additional Resources, if any; provided, however,
that if, the Sellers incur expenses in acquiring Additional Resources on
behalf of Customer, Customer shall reimburse the Sellers for such expenses.
The Sellers shall proceed in good faith in cooperation with Customer to
install such resources (including the hiring or training of personnel) and
provide such Supplemental Services as soon as reasonably practicable.
2.2.4 If any Additional Resources are acquired solely
for the performance of Supplemental Services, the Sellers shall only use them
for such purposes and shall not use, nor permit the use by anyone, of such
resources for any other purpose except with the express prior written consent
of Customer (which consent may be conditioned on the requirement of payments,
fees or royalties in connection with any such further use).
2.2.5 All written descriptions of Supplemental
Services prepared by Customer and delivered to the Sellers (including all
descriptions of Additional Resources, performance standards or criteria and of
the terms of payment of related Supplemental Costs) which are subsequently
relied upon by the parties as the basis on which such Services are provided,
shall be deemed to be amendments to Schedule 2.2 of this Agreement, and the
Sellers shall perform the Supplemental Services (and Customer shall perform
its related obligations, if any) in accordance with their respective terms.
2.2.6 Notwithstanding anything in this Agreement to
the contrary, the Sellers shall have no obligation to upgrade the Network
Services provided or the Equipment, lines and Software supporting such
Services except as Supplemental Services.
2.3 Additional Operating Requirements. In furtherance, and
---------------------------------
not in limitation, of the foregoing, the Sellers shall provide the Services in
accordance with the following:
2.3.1 The Sellers shall at all times perform the
Services subject to the direction of Customer. Provided that the Sellers
otherwise comply with all of the terms and conditions of this Agreement and
are able to provide fully and completely to Customer all of the Services, the
Sellers shall have the right from time to time, acting in their own discretion
and without the prior approval or consent of Customer (a) to determine which
Equipment shall be used to perform the Services and (b) to allocate the
availability or capacity of such Equipment (or other resources used to provide
the Services) among all available users thereof.
Notwithstanding the foregoing, the Sellers shall not
exercise any discretion otherwise available under this Agreement in any manner
which lacks reasonable business justification when taking into consideration,
in a manner
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consistent with past practice (as if the acquisition of the Business by the
Customer pursuant to the Asset Purchase Agreement had not occurred), the
Business and the essential importance of the Services to the ongoing
operations and goodwill of Customer.
2.3.2 The Sellers shall at all times give priority to
the Services which is, on an overall basis, no less than the priority which
had been provided to the Business by the Sellers and its Affiliates prior to
the date of this Agreement, whether such priority is determined in terms of
the allocation of computing time, Data storage capacity, the availability of
other resources, the scheduling of Services (including, without limitation,
the attention of the Sellers' personnel to related facilities management,
programming, operations and consulting activities), the recovery of operating
capability following any scheduled or unscheduled interruption of operations,
or other reasonable measures of performance.
2.3.3 In the event of any incidents affecting the
ability of the Sellers to perform any of the Services, which incidents require
the Sellers to invoke disaster recovery procedures in their efforts to restore
their ability to provide Services to Customer, the Sellers shall give priority
to Customer's requirements (when compared to the requirements of the Sellers
and its and their Affiliates that might be similarly affected) which is, on an
overall basis, no less than the priority which had been provided to the
Business by the Sellers and its and their Affiliates prior to the date of this
Agreement in any similar circumstances involving unscheduled system failures.
2.3.4 Pursuant to such reasonable guidelines as the
Sellers may establish and provide to Customer from time to time, the Sellers
shall continue to provide to Customer's Employees, contractors, consultants
and agents such access to the Sellers' facilities, Equipment and personnel as
may be reasonably necessary to permit Customer to coordinate the performance
of the Services with its ongoing business operations in a manner consistent
with past practice and with the requirements established by and pursuant to
this Agreement.
2.4 Related Contracts. During the Term, the Sellers shall
-----------------
not amend, terminate or breach any Contract in effect on the date of this
Agreement, as listed on Schedule 2.4 attached to this Agreement (nor any
Contract subsequently entered into in replacement of any of them), nor shall
the Sellers take or fail to take any action which would entitle any other
parties to any such Contracts to amend or terminate such Contracts, unless the
Sellers, prior to any such termination or other event, either (a) obtains the
express prior written consent of Customer thereto or (b) enters into one or
more further agreements to assure that the services, supplies or other
resources provided under the subject Contract will continue to be available
without any interruption in the level of support provided for the benefit of
Customer and, in such event, the Sellers shall provide reasonable notice
thereof to Customer, together with such relevant information as Customer may
reasonably request.
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2.5 Non-disruption of Services. Other than for disruptions
--------------------------
scheduled pursuant to Section 6 or excused pursuant to Section 14.6, the
Sellers shall provide and perform the Services throughout the Term. The
parties mutually recognize that any disruption of the operation of the
Services could result in material and irreparable harm to Customer;
accordingly, during the Term (and subject to the provisions of Sections 6 and
14.6), the Sellers shall not terminate, disrupt or fail to perform any of the
Services notwithstanding any actual or purported failure of Customer to
perform any obligation under this or any other agreements between Customer or
the Sellers other than (a) pursuant to a final and binding Order of a court of
competent jurisdiction or (b) in accordance with the provisions of Section
10.4 of this Agreement.
2.6 Customer Equipment and Facilities.
---------------------------------
2.6.1 Subject to the provisions of Section 4.4 of
this Agreement and the maintenance obligations of the Sellers constituting a
part of the Services, Customer shall maintain in Customer's offices (or any
successor location) during the Term, at no expense to the Sellers, all
computer hardware, telecommunications equipment and other related equipment
and media but excluding other business equipment which does not store any Data
such as copy machines or facsimile machines) required in order to permit the
Sellers to provide Services to Customer under this Agreement.
2.6.2 Pursuant to such reasonable guidelines as
Customer may establish and provide to the Sellers from time to time, Customer
shall provide to the Sellers' Employees, contractors, consultants and agents
such access to Customer's facilities, Equipment and personnel as may be
reasonably necessary to permit the Sellers to perform the Services in a manner
consistent with past practice and with the requirements established by and
pursuant to this Agreement.
Section 3. Performance Standards.
---------------------
3.1 Required Performance.
--------------------
3.1.1 The Sellers shall perform all of the Basic
Services in order that their performance, when evaluated pursuant to and in
accordance with the measurements of performance set forth in Schedule 3.1.1
attached to this Agreement and, to the extent not identified in such Schedule,
otherwise represented by the Performance Records, shall equal or exceed in
type, quality and manner of performance the Services rendered by the Sellers
and its Affiliates with respect to the Business, taken as a whole prior to the
date of this Agreement, subject only to such deviations as are approved by
Customer pursuant to this Agreement.
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3.1.2 The Sellers shall perform all of the
Supplemental Services in order that their performance, when evaluated pursuant
to and in accordance with the standards of performance, if any, which Customer
and the Sellers may accept in establishing such Services pursuant to Section
2.2 of this Agreement (as reflected by any writings deemed to be amendments to
Schedule 2.2 pursuant to Section 2.2.6), shall equal or exceed such standards.
3.2 Performance Audit.
-----------------
3.2.1 The Sellers shall provide periodic updates to
Customer from time to time at its request regarding compliance with the
requirements of this Agreement provided that Customer will make such requests
no more frequently than quarterly. Such updates may be provided in writing or
in meetings as the parties may mutually agree.
3.2.2 In the event that Customer, acting in good
faith, believes that the Sellers have failed to perform the Services, or any
of them, in accordance with the standards for performance applicable pursuant
to this Section 3, Customer shall have the right at its expense to conduct, or
to appoint accountants and/or lawyers to conduct, an audit of the books and
records maintained by the Sellers regarding the performance of the Services,
in order to evaluate the performance of the Services under any or all of the
relevant standards.
Section 4. Use of Software.
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4.1 Existing Software.
-----------------
4.1.1 (1) Sellers agree to indemnify and hold
Customer harmless against and in respect of any Damages and Claims incurred by
Customer that result from, relate to or arise out of the failure of any of the
Sellers or any of their Affiliates to obtain any approvals, assignments,
licenses, sublicenses or other instruments which are necessary in order for
Sellers to provide to Customer, without additional cost or expense to Customer
or interruption of service, the Basic Services in accordance with Section 2.1
of this Agreement. On and after the date of this Agreement Sellers shall use
their reasonable best efforts to obtain and deliver to Customer (at no cost to
Customer other than as contemplated by Section 4.5.2) copies of all necessary
consents, approvals, licenses or other instruments required to provide the
Sellers the right to use the Licensed Software for the benefit of Customer in
connection with the Business during the Term (provided, however, that the
Sellers may elect to not obtain the necessary consents therefor regarding any
Licensed Software if, in lieu thereof, the Sellers deliver to Customer, each
in form and substance satisfactory to Customer, a listing of those Software
programs for which consents or related approvals shall not be obtained and a
written agreement reaffirming the Sellers' obligation to indemnify and hold
Customer harmless with
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regard to any Damages and Claims relating to the absence of such consents or
related approvals).
(2) Sellers have delivered to Customer the
Software License Agreement which provides for the perpetual, royalty-free use
by Customer of the Sellers' Software in accordance with the terms of the
Software License Agreement. On or after the date of this Agreement and from
time to time upon the request of Customer, but no more frequently than
quarterly, Seller will deliver to Customer, to the extent not already in
Customer's possession, electronic copies of all source code, object code and
existing Documentation relating to the Sellers' Software.
4.2 Software Provided by Customer.
-----------------------------
4.2.1 The Sellers shall, at the request of Customer,
and at Customer's cost, install and implement all Enhancements to, or any new
releases or versions of, any Licensed Software or Sellers' Software as
Customer or the licensor of any Licensed Software may from time to time
specify, including, without limitation, such installations and implementations
as may be required as a condition to the Sellers continuing in effect during
the Term any maintenance or other support coverage with respect to any
Equipment or Software used to perform the Services; provided, however, that to
the extent the Sellers install and implement Enhancements to, or any new
releases or versions of, any Software which is used in connection with both
the Services and the ongoing business of the Sellers and their Affiliates and
there is no additional direct cost of such modifications solely as a result of
Customer's usage, the Sellers acknowledge that any fees or costs associated
therewith shall be deemed to be part of the Basic Services.
4.2.2 The Sellers shall use all Software (other than
Software which is licensed for use in connection with both the Services and
the ongoing business of the Sellers and their Affiliates) installed and
implemented pursuant to Section 4.2.1 exclusively for the performance of
Services under this Agreement and for no other purpose; provided the Sellers
shall not be restricted from using Licensed Software (or Enhancements to, or
new releases or versions of, any of the foregoing) for which the Sellers
independently acquire or previously possess the necessary rights.
4.2.3 The Sellers shall maintain all the Sellers'
Software, at its own cost, to the extent required to enable Customer to
continue to operate the Business in the ordinary course of business, as it was
operated on the date of this Agreement.
4.3 Additional Software. In the event that the Sellers, in
-------------------
connection with the performance of any Services, install and implement any
Licensed Software
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or other Software not in use as of the date of this Agreement, whether in
addition to or in substitution for any existing Software, or acquires or
otherwise installs any Enhancements to any Licensed Software or other
Software other than as contemplated by Section 4.2.1, the Sellers shall
first assure, prior to any such use, that such use may occur as fully as if
the Sellers had first obtained such rights as are contemplated in accordance
with the provisions of Section 4.1.1 and shall deliver to Customer copies of
such consents, approvals, licenses or other instruments relating to this
Agreement as may be appropriate, in form and content acceptable to
Customer.
4.4 Cooperative Modifications. In the event either
-------------------------
Customer or the Sellers wish to install and implement Enhancements to, or to
replace, any Software, the parties shall endeavor in good faith to cooperate
with each other to assure that any such changes shall be executed in such a
manner that existing Software or Equipment utilized by or associated with the
other party, whether used by the Sellers or Customer in connection with the
Services, can continue to perform as contemplated after giving effect to the
proposed changes. In the event that cooperation in the manner contemplated by
this Section 4.4 will require one of the parties to incur direct, out-of-
pocket costs and expenses (which must be commercially reasonable in all cases)
which are outside the ordinary course of business, then any proposed changes
will not be implemented until the parties, acting in good faith, have agreed
upon the allocation of responsibility for such costs and expenses.
4.5 Customer Payments.
-----------------
4.5.1 Customer acknowledges that, with respect to any
Licensed Software used by the Sellers for the independent benefit (which does
not include the Basic Services) of Customer, such continued independent use
during the Term, to the extent such use was conditioned upon first obtaining
the necessary consent or approval of the licensor with respect thereto may
require the payment of additional periodic license payments or maintenance
fees. Customer shall be directly responsible for such payments; provided,
that Customer shall be provided with reasonable, prior written notice of such
payments and the reasonable opportunity if requested, to negotiate with a
licensor. In the event Customer fails to make any such payments; the Sellers
shall not be obligated to continue to use the related Licensed Software or to
continue to perform any Services for which such Software is required and
Customer shall indemnify and hold the Sellers harmless from and against any
Damages or Claims incurred by the Sellers as a result of any such failure.
4.5.2 In the event that, with the prior express
consent of Customer, the Sellers pay fees on behalf of Customer with respect
to the continued use of Software for Customer's benefit which are otherwise
properly the responsibility of Customer pursuant to Section 4.5, the Sellers
shall prepare an
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invoice and other supporting Documentation with respect to such fees and
Customer shall promptly reimburse the Sellers for all such amounts.
4.5.3 In addition to amounts payable by Customer
pursuant to the preceding provisions of this Section 4.5, Customer shall also
be responsible for the reimbursement to the Sellers, pursuant to this Section
4.5.3, of certain costs associated with the maintenance by the Sellers of
Software which supports any of the Licensed Software described in Section
4.5.1. In the event any Enhancement or release of any such Software is
required by the licensor thereof to be installed by the Sellers, Customer
shall reimburse the Sellers the lesser of (a) the amounts required to upgrade
the related Licensed Software to permit it to run satisfactorily with the new
Enhancement or release of the Software or (b) in the event Customer desires to
not align the Licensed Software with the new Enhancement or release, the
administrative and related costs incurred by the Sellers to continue to
operate the Licensed Software with the pre-Enhancement version of the system
Software. Customer and the Sellers shall determine the need for such
additional costs, and the amounts thereof, in accordance with the procedures
of Section 2.2, and the costs shall be considered as Supplemental Costs.
4.6 Disclaimer. The Sellers, as to any Licensed Software
----------
or any other Software provided by any of them, and Customer, as to any
Customer Software or any Licensed Software provided by Customer or installed
at Customer's instructions, HEREBY EXPRESSLY DISCLAIM AS TO THE OTHER PARTY
ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, RESPECTING SUCH
SOFTWARE, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES AS
TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 5. Personnel Issues.
----------------
5.1 As soon as practicable after execution of this
Agreement, the parties shall form a transition team (which shall include the
designation of a transition team leader for each party), which will develop a
transition plan designed to (a) coordinate, interface and/or otherwise
integrate the Software, Services and Equipment provided hereunder with the
information system currently being operated by Customer, and (b) separate the
interconnection of the parties created by this Agreement upon its termination.
The parties shall bear their own costs and expenses related to the transition
team and the development and implementation of the transition plan. Within 30
days before the end of the Term, the transition team and transition plan shall
also identify those Employees of the Sellers who will be available to transfer
employment to Customer at the end of the Term.
5.2 During the first six (6) months of the Term, the
Sellers may not materially change those Persons responsible for providing
Services hereunder without (i) providing reasonable advance notice to
Customer, (ii) replacing such
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Persons with personnel of comparable or better relevant experience and
knowledge of the Software and (iii) receiving the prior written consent of the
Customer, which consent shall not be unreasonably withheld. For purposes of
this Section 5.2, "materially changing those Persons responsible for providing
Services hereunder" shall mean replacing, reassigning or terminating more
than one-fifth of such Persons, or one-fifth of the managers of the Sellers
performing such Services.
5.3 After the period referred to in Section 5.2 through the
expiration of the Term, the Sellers may not materially change those Persons
responsible for providing Services hereunder without (i) providing reasonable
advance notice to Customer, (ii) replacing such Persons with personnel of
comparable or better relevant experience and knowledge of the Software and
(iii) receiving the prior written consent of the Customer, which consent shall
not be unreasonably withheld. For purposes of this Section 5.3, "materially
changing those Persons responsible for providing Services hereunder" shall
mean replacing, reassigning or terminating more than one-half of such Persons,
or one-half of the managers of the Sellers performing such Services.
Section 6. Scheduled Interruptions. If, in addition to regularly
-----------------------
scheduled outage time for maintenance and backup, Sellers determine during the
Term to modify, repair or replace any Equipment or Software used to perform
the Services in such a manner as to require one or more scheduled
interruptions of the Sellers' ability to perform the Services, the Sellers
shall give reasonable advance notice to Customer and cooperate in good faith
to arrange scheduling and similar issues in order to minimize the disruption
of Customer's ongoing business operations, subject in all such events to the
provisions of Section 2.3.2.
Section 7. Costs; Invoicing and Payments. The Sellers and
-----------------------------
Customer mutually intend that any and all payments made by Customer to the
Sellers under this Agreement as compensation for the proper performance of the
Services shall be intended to only provide reimbursement to the Sellers for
all actual costs and expenses incurred by the Sellers in connection with the
performance of the Services, in a manner which shall be consistent (a) as to
the Basic Services, with the historical method of allocation involving the
Business, and (b) as to any Supplemental Services for which particular rates
are not established pursuant to Section 2.2 with the then current procedures,
by which the Sellers allocate among its Affiliates the costs of providing
computer processing and communication services.
7.1 Basic Costs.
-----------
7.1.1 The Sellers and Customer mutually acknowledge
that, although the amount, volume or frequency with which the Basic Services
will be performed, or will be required by Customer to be performed in the
ordinary course of conducting the Business, may increase or decrease when
compared to periods
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prior to the date of this Agreement, payment of the Basic Costs pursuant to
this Section 7.1 shall fully compensate the Sellers for the Basic Services.
7.1.2 Subject to the remaining terms and conditions
of this Agreement and during the Initial Term hereof, in consideration of the
performance of the Basic Services by the Sellers, Customer shall reimburse the
Sellers an amount which is set forth on Schedule 7.1.2 attached to this
Agreement (the "Basic Costs"), plus the amount of the Network Costs to be
reimbursed pursuant to Section 7.1.4.
7.1.3 Subject to the remaining terms and conditions
of this Agreement, and during any Renewal Term hereof, in consideration of the
performance of the Basic Services by the Sellers, Customer shall reimburse the
Sellers an amount equal to one hundred fifty percent (150%) of the amount
which is set forth on Schedule 7.1.2 attached to this Agreement, plus the
amount of the Network Costs to be reimbursed pursuant to Section 7.1.4.
7.1.4 With regard to those Basic Services consisting
of Network Services (as identified on Schedule 1.1, Part I), the Sellers shall
notify Customer concurrently with any invoice provided pursuant to Section 7.3
of the direct costs and expenses incurred by the Sellers with respect to
obtaining the Network Services (the "Network Costs"), which notice shall be
accompanied by appropriate supporting Documentation and detail. Customer
shall reimburse the Sellers on a monthly basis for the Network Costs.
7.2 Supplemental Costs. Subject to the terms and
------------------
conditions of this Agreement and unless otherwise agreed by the parties
(including, as appropriate, as to the timing of any periodic payments which
are contemplated pursuant to Section 7.3) in consideration of the performance
of the Supplemental Services by the Sellers, Customer shall reimburse the
Sellers (a) any direct, out-of-pocket expenses incurred by the Sellers (which
must be commercially reasonable in all cases) in connection with the
acquisition of the resources required to provide such Supplemental Services
(as contemplated in Section 2.2), and (b) an amount equal to the amount which
Sellers would charge their Affiliates for such Supplemental Services pursuant
to Sellers' intercompany billing formula in effect as of June 30, 1998.
7.3 Reimbursements. Customer shall reimburse to the
--------------
Sellers on a monthly basis, by the 15th day of each month, an amount equal to
the sum of (a) an installment, in equal payments, of the annual Basic Costs
for the then current period, plus (b) a similar payment, as determined on a
ratable basis, for the then current Supplemental Costs. The Sellers shall
deliver to Customer on or before the fifth day of each month an appropriate
invoice for such amount, in such form and accompanied by such supporting
detail as Customer may reasonably request, and all amounts so invoiced will be
due and payable by the last day of the month.
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7.4 Audit Rights. The Sellers shall maintain adequate
------------
books and records relating to the calculation of the Basic Costs and the
Supplemental Costs. Upon reasonable notice and at reasonable times, Customer
shall have the right at its expense to conduct, or to appoint accountants,
lawyers and/or other experts to conduct, an audit of such books and records on
Customer's behalf, in order to confirm the proper calculation of the Basic
Costs and Supplemental Cost.
7.5 Taxes.
-----
7.5.1 Customer shall pay all taxes which it is
legally required to pay as a result of the Sellers' provision of the Services
pursuant to this Agreement; provided, however, that Customer shall not be
liable for the payment to the Sellers or any Governmental Entity of any taxes
based on the Sellers' income or gross receipts, including, without limitation
any state or local gross receipts, sales and/or use tax, or any amounts of
corresponding interest or penalty, imposed by any jurisdiction as a result of
the payments made by Customer under this Agreement.
7.5.2 The Sellers shall be responsible for, and shall
properly report and remit to the appropriate Governmental Entities, payments
of such taxes (including any amounts of corresponding interest or penalty), if
any, for which Customer has no liability pursuant to the proviso set forth in
Section 7.5.1. In the event Customer is required to make any separate payment
of any such taxes, the Sellers shall reimburse promptly to Customer the
amounts thereof upon written demand therefor by Customer.
7.6 Offsets. Provided in each instance written notice is
-------
given in a timely fashion, specifying in detail the basis for any of the
following, (a) the Sellers may deduct, from any sums it owes to Customer
hereunder, any sums it is owed by Customer or Customer's Affiliates, whether
pursuant to this Agreement or any other Contract and (b) Customer may deduct
from any sums it owes to the Sellers hereunder, any sums Customer or
Customer's Affiliates are owed by the Sellers, whether pursuant to this
Agreement or any other Contract.
Section 8. Ownership of Property and Data.
------------------------------
8.1 Copyright. Except as otherwise provided in the
---------
Database License Agreement, the Customer acknowledges that all Data and all of
the products resulting from the Services performed for Customer pursuant to
this Agreement (the "Results"), including, without limitation, all
compilations of Data created by the Sellers shall, from the inception of
creation, become part of the Licensed Database and shall be owned by the
Sellers. Customer hereby acknowledges that such Results shall not be deemed
"works made for hire" under the Copyright Act of 1976, as amended, 17 U.S.C.
101 et. seq.
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8.2 Other Interests.
---------------
8.2.1 The Sellers acknowledge that nothing contained
in this Agreement shall vest in the Sellers, nor shall the Sellers claim or
attempt to claim, any ownership or other intellectual property rights in any
Customer Software (other than rights of use contemplated by Section 4 of this
Agreement) in connection with the performance of the Services. Customer
acknowledges that nothing contained in this Agreement shall vest in Customer,
nor shall Customer claim or attempt to claim, any ownership or other
intellectual property rights in any of the Sellers' Software (other than
rights of use contemplated by Section 4 of this Agreement) or Data.
8.2.2 The Sellers shall not license, sell or
otherwise disclose any Data provided to the Sellers by Customer pursuant to
this Agreement to any other Person without the express written consent of
Customer; provided, in the event Customer discloses Data to anyone other than
the Sellers or their Affiliates in such a manner that such Data no longer
constitutes Confidential Matters subject to the provisions of Section 9 of
this Agreement and the Sellers also obtain such Data other than as a result of
the performance of Services, then such prohibition shall not be applicable.
8.2.3 Upon the request of Customer and at Customer's
expense, the Sellers shall execute and deliver to Customer such documents or
other instruments as Customer, in the exercise of its reasonable business
judgment and upon advice of counsel, may deem appropriate in furtherance of
the provisions of this Section 8.
Section 9. Confidentiality.
---------------
9.1 Definition. For purposes of this Agreement, the term
----------
"Confidential Matters" includes, but is not limited to the following items,
whether existing now or created in the future:
9.1.1 all knowledge or information concerning the
Business or concerning the Assets of Customer or concerning the Affiliates of
Customer, which is not already available to the public, such as internal
operating procedures; investment strategy; sales data and customer lists;
financial plans, projections and reports; and insurance programs, plans and
products;
9.1.2 all knowledge or information concerning Assets
owned, leased, licensed and/or developed by or for (a) the Sellers in
connection with the Business or (b) Customer, or the Affiliates of either of
them, and not available to the public, such as computer systems, programs,
Software and devices, plus information about the design, methodology and
Documentation therefor;
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9.1.3 information about or personal to insureds,
clients, agents, Employees or applicants (for employment, products or
services) of Customer or its Affiliates or otherwise relating to the Business;
9.1.4 information, materials, products or any other
tangible or intangible Assets in the possession or under the control of (a)
the Sellers in connection with the Business or (b) Customer, or the respective
Affiliates of either of them, which is proprietary to, or confidential to or
about any other Person; and
9.1.5 records and repositories of all the foregoing,
in whatever form maintained.
The foregoing notwithstanding, "Confidential Matters" shall not be considered
to include information generally known within the insurance industry or
otherwise publicly available other than as a result of disclosure of such
information (i) in the case of information about the Sellers, by Customer, or
(ii) in the case of information about Customer, by the Sellers or in either
case by their respective Affiliates or representatives in violation of Law or
of the terms of this Agreement or any other Contract to which the disclosing
Person is a party. The failure to mark any material or information
"confidential" shall not affect the confidential nature thereof.
9.2 Obligations of Customer. Customer shall, and shall
-----------------------
cause its Affiliates to hold all Confidential Matters pertaining or belonging
to the Sellers, including, but not limited to, information relating to third
party owned software, in the strictest confidence at all times, making no use
thereof other than in connection with this Agreement or the negotiations
between the parties to this Agreement. Furthermore, Customer shall not,
without the prior approval of an appropriate officer of the Sellers, release
any such Confidential Matters pertaining to the Sellers to any Person not
directly involved in the activities contemplated under this Agreement.
However, any such Confidential Matters may be disclosed to Persons employed or
retained by Customer, or the respective Affiliates of either of them who are
directly involved in the activities contemplated hereby, it being understood
that, in any event, Customer shall be responsible for any breach of this
Section 9 by any such Person. Upon request by Sellers, Customer shall execute
a confidentiality or nondisclosure agreement in favor of any third party
software vendor.
9.3 Obligations of the Sellers. The Sellers shall, and
--------------------------
shall cause their Affiliates to, hold all Confidential Matters pertaining or
belonging to Customer, or any of their respective Affiliates, in the strictest
confidence at all times, making no use thereof other than in connection with
the provision of Services under this Agreement. Furthermore, without the
prior approval of an appropriate officer of Customer, the Sellers shall not,
and shall not permit its Affiliates to, release any Confidential Matters
pertaining or belonging to Customer, or any of their respective Affiliates, to
any Person not directly involved in the activities contemplated under this
Agreement. However, any such Confidential Matters may
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be disclosed to Persons employed or retained by the Sellers who are directly
involved in the activities contemplated hereby, it being understood that, in
any event, the Sellers shall be responsible for any breach of this Section 9
by any such Person.
Section 10. Term and Termination.
--------------------
10.1 Initial Term. The Initial Term of this Agreement shall
------------
commence on the date of this Agreement and shall continue for a twenty-four
month period ending on the anniversary date of this Agreement.
10.2 Extension. Upon the prior written notice of the
---------
Customer, which must be delivered to the Sellers not less than one hundred
twenty (120) days prior to the expiration of the Initial Term, the Initial
Term may be extended for an additional one-year term, ending on the third
anniversary date of this Agreement (the "Renewal Term").
10.3 Notice of Termination. Notwithstanding anything else
---------------------
contained in this Section 10 or any other provision of this Agreement:
10.3.1 In the event of a material breach of any of the
terms and conditions of this Agreement by the Sellers, Customer shall have the
right to give notice of termination to the Sellers setting forth the breach
giving rise to such termination and the Termination Date, which date shall be
at least 30 days from Sellers' receipt of notice. In such event, Sellers
shall cooperate with Customer in accordance with the provisions of Section 11
and any Transition Procedures related to the Services being terminated to
assure that performance of such Services may be continued by Customer (or its
designee) without adverse disruption to the Business.
10.3.2 Customer shall have the right at any time, on
written notice to the Sellers, to terminate the obligation of the Sellers to
perform any or all of the Services and, upon receiving any such notice, the
Sellers shall (a) terminate performance in accordance with the terms specified
in such notice and (b) cooperate with Customer in accordance with the
provisions of Section 11 and any Transition Procedures related to the Services
being terminated to assure that performance of such Services may be continued
by Customer (or its designee) without adverse disruption to the Business.
10.3.3 Any notice of termination under this Section
10.3 must include, in order to permit the orderly performance for the mutual
benefit of the parties of all relevant Transition Procedures, a date (earlier
than the Termination Date) for the termination of provision of the Services as
may be appropriate, it being the intent of the parties that, notwithstanding
any such notice of termination,
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this Agreement shall not effectively terminate until all related Transition
Procedures have been performed (or mutually waived by the parties).
10.4 Termination by Sellers. In the event of a failure of
----------------------
Customer to perform any obligations hereunder, including, without limitation,
the obligation of payment under this Agreement, the Sellers shall have a right
to suspend their obligations to perform the Services, which suspension shall
commence not less than 30 days from Customer's receipt of notice, until such
time as Customer has become current on all such payments or has otherwise
fully performed, at which time Sellers shall resume such Services.
10.5 Payment Obligations upon Termination. Upon any
------------------------------------
termination pursuant to Section 10.3.2 of this Agreement, Customer shall have
no further reimbursement obligations relating to the terminated Services;
provided, however, that no such termination relating to any or all of the
Basic Services shall relieve Customer of its obligation to reimburse the
Sellers (a) the remaining unpaid balance of any Basic Costs due and payable
for the remainder of the Term, (b) any Supplemental Costs already incurred by
the Sellers or for which it is or will be required to pay by Law or by the
terms of any Contract approved by Customer in connection with commencing the
related Supplemental Services or (c) any Network Costs (to the extent
reimbursable pursuant to Section 7.1.4) already incurred by the Sellers prior
to such termination.
Section 11. Transition Period.
-----------------
11.1 Transition Procedures.
---------------------
11.1.1 As soon as practicable following the date of
this Agreement, the transition teams appointed by Sellers and Customer under
Section 5 will cooperate in developing a series of practices and procedures to
be performed in connection with the initial implementation and any termination
of this Agreement (whether as a result of the expiration of the Term of this
Agreement or an earlier termination as provided for in Section 10 of this
Agreement), which procedures (the "Transition Procedures") shall be designed
to satisfy Customer's reasonable requirement for transition of Services at
initiation and at termination for Customer or any Person other than the
Sellers in such a manner that the performance of Services and the Business are
not disrupted. All written Transition Procedures shall be deemed to be
amendments to this Agreement, to be considered a part hereof as if fully
incorporated herein. All such Transition Procedures shall remain subject to
review and amendment from time to time by Customer, and any such amendments
developed by Customer shall be deemed to become part of this Agreement and
will be deemed binding on the Sellers, unless the Sellers reasonably object in
good faith, in which event the parties shall negotiate and resolve their
differences (with the results then being deemed amendments to the Transition
Procedures and this Agreement). Sellers agree to provide Customer's employees
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with an appropriate work space at Sellers' offices and to otherwise cooperate
with Customer's employees for the purpose of furnishing such information about
Sellers' s Software and the Licensed Database as Customer may reasonably
request.
11.1.2 The Sellers acknowledge that the Transition
Procedures are a commercially reasonable aspect of a transaction of the nature
contemplated by this Agreement and the Asset Purchase Agreement and will
proceed in good faith, in full cooperation with Customer, to develop, review
and maintain the Transition Procedures. In doing so, the Sellers shall fully
involve, as appropriate, both management and non-management personnel.
11.1.3 The "Transition Services" shall include (a) all
of the efforts of the Employees of the Sellers in (i) the development, review,
and maintenance of Transition Procedures, and (ii) the performance and
execution of the Transition Procedures as contemplated by Section 11.2 of this
Agreement, and (b) all computer processing and communication services provided
in connection therewith which are not otherwise part of the Basic Services or
Supplemental Services, but shall exclude any programming of software (unless
otherwise agreed) performed with respect to Transition Services in connection
with the termination of this Agreement.
11.1.4 Except as contemplated by Section 3.14.2 of the
Asset Purchase Agreement, the Transition Procedures shall expressly include
(a) detailed plans for the orderly removal and transfer between the parties of
such assets, which are the respective property of the other or to which the
other has no further right of use upon any termination and (b) an opportunity
for Customer to run, during the Term, the new information system to be
utilized by it after the Termination Date on a parallel basis with the system
provided herein, to ensure an orderly transition, provided, however, the
Customer shall run the new information system on its system without any
disruption to or interference with the Sellers' system.
11.2 Performance. Commencing on the earlier of (a) the date
-----------
on which a notice of termination pursuant to Section 10 of this Agreement is
received or (b) the date which is 120 days prior to the Termination Date, the
parties shall initiate and perform until completion, and in an orderly manner
(taking into account at the time the period of time before the Termination
Date, the priority of particular procedures and related factors) all of the
Transition Procedures.
Section 12. Indemnification. In addition to any indemnity either
---------------
party may be expressly entitled to under other provisions of this Agreement,
the parties shall be entitled to indemnification to the extent and upon the
terms set forth in this Section 12.
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12.1 Indemnification by the Sellers. The Sellers, jointly
------------------------------
and severally, shall indemnify, defend and hold Customer and its Affiliates
harmless against any Damages and Claims incurred by reason of:
12.1.1 the breach by the Sellers of this Agreement,
including the representations, warranties and covenants of the Sellers
contained herein;
12.1.2 any fee claimed by any Person acting on behalf
of the Sellers or its or their Affiliates in connection with this Agreement;
12.1.3 any claim that any Software utilized in
providing the Services (other than Customer Software and Licensed Software
provided by or on the instructions of Customer) violates any patent,
trademark, copyright, trade secret or any other proprietary right of any
Person (including, without limitation, any claims that such use of any such
Customer Software or Licensed Software used for operating systems purposes
occurs in the absence of any consents, approvals or other agreements or
instruments otherwise required to be delivered pursuant to Section 4.1.1 of
this Agreement), but only to the extent, in the case of Licensed Software
consisting of other than Software used for operating systems, that the Sellers
are able to successfully obtain indemnification therefor from the licensor
thereof; or
12.1.4 any claim by any third party Software vendor
regarding additional license fees, royalties, maintenance fees or other
amounts which may be due (other than fees payable by Customer under Section
4.5.1), or any claims by any such Persons that the use of any Licensed
Software by the Sellers (other than Licensed Software provided by or on the
instructions of Customer) violates any patent, trademark, copyright, trade
secret or any other proprietary or contract rights of any Person, as a result
of continued use of Licensed Software referred to in Section 4 of this
Agreement, whether during the Term or following the termination of this
Agreement.
12.2 Indemnification by Customer. Customer shall indemnify,
---------------------------
defend and hold the Sellers and their Affiliates harmless against any Damages
and Claims incurred by reason of:
12.2.1 the breach by Customer of this Agreement,
including the representations, warranties and covenants of Customer contained
herein;
12.2.2 actions taken by the Sellers in reliance upon
written instructions or orders received from Customer in connection with the
Services provided hereunder;
12.2.3 any fee claimed by any Person acting on behalf
of Customer or its Affiliates in connection with this Agreement; or
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12.2.4 any claim that any Customer Software violates
any patent, trademark, copyright, trade secret or any other proprietary right
of any Person, but in the case of any such Customer Software, only to the
extent that Customer is able to successfully obtain indemnification therefor
from the licensor thereof.
12.3 Notification. Any Person entitled to assert a claim or
------------
demand for indemnification under this Section 12 (the "Indemnitee"), in order
to secure indemnification with respect to this Agreement, shall notify the
indemnifying party hereunder (the "Indemnitor") in writing of the existence of
such matter within a reasonable time based on the facts and circumstances of
the situation, including the necessities of court actions. The Indemnitee
shall furnish to the Indemnitor promptly such information as the Indemnitor
may reasonably request in respect to such claim or demand. The Indemnitor
shall have the right (but not the obligation) at its sole expense and in the
name of the Indemnitee, to compromise or defend any matter involving a third
party (a "Third Party Claim") for which indemnification has been sought
hereunder. The Indemnitee shall cooperate and cause its Affiliates to
cooperate with the Indemnitor in compromising or defending any such Third
Party Claim, provided the actual out-of-pocket expenditures (other than legal
expenses) incurred in such cooperation shall be paid by the Indemnitor. After
notice from an Indemnitor to an Indemnitee of its election to assume the
defense of a Third Party Claim, such Indemnitor shall not be liable to such
Indemnitee under this Section 12 for any legal expenses subsequently incurred
by such Indemnitee in connection with the defense thereof; provided that such
Indemnitee shall be entitled to participate in such defense and to employ
counsel, at the Indemnitee's expense, to assist it therein. If the Indemnitor
does not provide the Indemnitee with a written notice of its intention to
defend the Third Party Claim or does not commence to compromise or defend such
Third Party Claim within thirty (30) days after receipt of notice from the
Indemnitee of the existence of such claim, or if the Indemnitor disputes its
liability to the Indemnitee for any sum pursuant to this Section 12 or
otherwise, the Indemnitee may defend or otherwise dispose of the Third Party
Claim; provided that in the absence of reasonable notice by the Indemnitee to
the Indemnitor, taking into consideration the facts and circumstances, no
right to seek indemnification shall exist; and provided, further, that such
Indemnitee shall not consent to entry of any judgment or enter into any
settlement or compromise with respect to such Third Party Claim without the
written consent of the Indemnitor (which consent shall not be unreasonably
withheld).
Any other provision in this Section 12 notwithstanding, if an offer of
settlement or compromise is received by an Indemnitor with respect to a Third
Party Claim and such Indemnitor notifies the related Indemnitee in writing of
such Indemnitor's willingness to settle or compromise such Third Party Claim
on the basis set forth in such notice and such Indemnitee declines to accept
such
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<PAGE> 100
settlement or compromise, such Indemnitee may continue to contest such Third
Party Claim, free of any participation by such Indemnitor, at such Indemnitee's
sole expense. In such event, the obligation of such Indemnitor to such
Indemnitee with respect to such Third Party Claim shall be equal to the lesser
of (a) the amount of the offer of settlement or compromise which such
Indemnitee declined to accept plus the amount of indemnifiable costs and
expenses incurred by such Indemnitee prior to the date such Indemnitor
notifies such Indemnitee of the offer to settle or compromise and (b) the
actual out-of-pocket amounts such Indemnitee is obligated to pay as a result
of such Indemnitee's continuing to contest such Third Party Claim.
Section 13. Equitable Relief. THE SELLERS ACKNOWLEDGE THAT THEIR
----------------
FAILURE TO PERFORM SERVICES UNDER THIS AGREEMENT MAY RESULT IN IRREPARABLE
HARM TO CUSTOMER. ACCORDINGLY, NOTWITHSTANDING THE PROVISIONS OF SECTION
14.6, CUSTOMER SHALL HAVE THE EXPRESS RIGHT TO COMMENCE ANY ACTION IN EQUITY
UNDER THIS AGREEMENT OR IN CONNECTION WITH ANY OTHER CLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT FOR SPECIFIC PERFORMANCE OF THE SERVICES OR FOR AN
INJUNCTION TO PREVENT THE UNAUTHORIZED DISCLOSURE OF CONFIDENTIAL MATTERS
PURSUANT TO THIS AGREEMENT. IN SUCH EVENT, CUSTOMER SHALL NOT BE REQUIRED TO
PROVE ANY ACTUAL DAMAGES PRIOR TO SEEKING SUCH EQUITABLE RELIEF.
Section 14. Miscellaneous.
-------------
14.1 Expenses. Except as otherwise provided in this
--------
Agreement, all costs and expenses incurred in connection with this Agreement
and the Services contemplated hereby shall be paid by the party incurring such
costs and expenses.
14.2 Notices. All notices and requests in connection with
-------
this Agreement shall be given to or made upon the respective parties in
writing and shall be deemed given as of the day actually received if sent by
telecopy, facsimile transmission, some other form of instantaneous
transmission, overnight or faster private courier, or if otherwise hand-
delivered, but if deposited in the United States mails, shall not be deemed
delivered until three (3) days after being sent, with postage pre-paid,
certified or registered, with return receipt requested and addressed as
follows:
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If to Customer:
The Ohio Casualty Insurance Company
136 North Third Street
Hamilton, Ohio 45025
Attn: Chief Executive Officer
With a concurrent copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
Attention: James A. Yano, Esq.
If to Sellers:
Great American Insurance Company
580 Walnut Street
Cincinnati, Ohio 45202
Attn: President
With a concurrent copy to:
Keating, Muething & Klekamp, P.L.L.
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Edward E. Steiner, Esq.
Either party may change its address for notices by giving
notice of same in the manner specified above.
14.3 Entire Agreement. This Agreement, together with the
----------------
Schedules to this Agreement and such further amendments as may be incorporated
into this Agreement from time to time, constitutes the complete and exclusive
statement of the parties' intentions with respect to the subject matter of
this Agreement and supersedes all prior agreements and understandings, whether
oral or in writing, with respect to the subject matter of this Agreement.
14.4 Choice of Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal substantive laws of the
State of Ohio, without regard to conflicts of laws principles.
14.5 Severability. If any provision of this Agreement shall
------------
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the
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remaining provisions shall in no way be affected or impaired thereby, unless
such invalidity, unenforceability or illegality renders the Agreement as a
whole substantially unperformable.
14.6 Force Majeure. Notwithstanding the provisions of this
-------------
Agreement, neither party shall be liable in any manner for any failure to
perform their obligations under this Agreement resulting in any manner from
delay, failure in performance, loss or damage due to fire, strike, embargo,
explosion, power blackout, earthquake, flood or other causes beyond such
party's reasonable control, whether or not similar to any of the foregoing
(including, without limitation, actions or inactions by unrelated Persons
contributing to failures to perform), for so long as such circumstances
continue to exist and to cause such failure to perform.
14.7 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties and their
respective successors and assigns any rights or remedies under or by this
Agreement. The foregoing notwithstanding, neither this Agreement nor the
parties' rights and obligations hereunder, nor any of these, may be assigned
by either party to this Agreement without the express written consent of the
other party and any purported assignment in violation hereof shall be null and
void; provided, however, that Customer may assign its rights under this
Agreement to any Person which is wholly-owned by it or any of its Affiliates
if (a) Customer gives immediate written notice of such assignment to the
Sellers, (b) the assignee agrees in writing to be liable for all of the
obligations of Customer arising under this Agreement (and Customer delivers
such agreement to the Sellers) and (c) any such assignment shall not relieve
Customer of any of its obligations hereunder nor otherwise require the Sellers
to alter, or incur additional expense, in connection with such assignment (it
being understood that any such expenses, if contemplated, must be agreed upon
pursuant to Section 2.2 of this Agreement).
14.8 Survival. The obligations and other provisions set
--------
forth in Sections 8, 9, 11, 12, 13 and 14 of this Agreement, together with any
other indemnification obligations set forth in this Agreement, shall survive
any expiration or termination of this Agreement.
14.9 No Partnership. Nothing contained in this Agreement
--------------
shall be deemed or construed by the parties or any other Person to create the
relationship of partnership or of joint venture.
14.10 Captions. The Section and Paragraph headings used in
--------
this Agreement have been inserted for convenience of reference only and shall
not be construed to affect the meaning or interpretation of any provision,
term or condition hereof.
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14.11 Duplicate Originals. This Agreement may be executed in
-------------------
multiple counterparts, each of which shall be deemed to be a duplicate
original but all of which, when taken together, shall constitute a single
instrument.
14.12 Schedules. All provisions contained in the Schedules
---------
hereto shall have the same force and effect as though set forth in the body of
this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day and year first set forth above by their duly
authorized representatives.
THE OHIO CASUALTY INSURANCE
COMPANY
By: /s/ Lauren N. Patch
------------------------------
Name: Lauren N. Patch
Title: President
GREAT AMERICAN INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
AMERICAN NATIONAL FIRE
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
AGRICULTURAL EXCESS AND SURPLUS
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
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<PAGE> 104
AGRICULTURAL INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
AMERICAN ALLIANCE
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
AMERICAN DYNASTY SURPLUS LINES
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
AMERICAN SPIRIT INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
CONTEMPORARY AMERICAN
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
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EAGLE AMERICAN INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
EDEN PARK INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
-------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
GREAT AMERICAN LLOYD'S
INSURANCE COMPANY
By: Great American Lloyd's, Inc.,
its Manager
By: /s/ Karen Holley Horrell
-------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
GREAT TEXAS COUNTY MUTUAL
INSURANCE COMPANY
By: /s/ Karen Holley Horrell
-------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
SEVEN HILLS INSURANCE
COMPANY
By: /s/ Karen Holley Horrell
-------------------------------
Name: Karen Holley Horrell
Title: Senior Vice President
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<PAGE> 106
Exhibit 2(g)
Investment Services Agreement,
dated December 1, 1998, between The Ohio Casualty Insurance Company
and American Money Management Corporation
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<PAGE> 107
INVESTMENT SERVICES AGREEMENT
-----------------------------
THIS INVESTMENT SERVICES AGREEMENT ("Agreement"), dated and effective
as of December 1, 1998, between THE OHIO CASUALTY INSURANCE COMPANY, an Ohio
insurance corporation ("Company"), and AMERICAN MONEY MANAGEMENT CORPORATION,
an Ohio corporation ("American").
WHEREAS, Company seeks to obtain advice with respect to the investment
of its assets; and
WHEREAS, American, an indirect wholly-owned subsidiary of American
Financial Group, Inc., an Ohio corporation ("AFG"), is willing and able to
supply such investment advice pursuant to the terms and conditions set forth
below;
NOW, THEREFORE, for the consideration herein stated, the parties agree
as follows:
I. INVESTMENT SERVICES.
-------------------
A. American shall furnish investment services to Company, which
services shall include the following:
1. to counsel and advise Company in connection with the
formulation of investment programs and strategies
designed to accomplish Company's investment objectives; and
2. to manage the investment of approximately $500,000,000
of Company's portfolio of investment assets in
accordance with the investment policies, objectives,
directions and guidelines established by its Board of
Directors or the Investment Committee, as set forth in
Section 1.3 below, and, in connection therewith, to
have full discretion and authority, without prior
consultation or prior approval, to buy, sell and
otherwise trade in bonds and other fixed income
securities and take such other actions which American
shall deem requisite, appropriate or advisable.
B. At the effective date of this Agreement, the amount of
Company's investment assets which shall be subject to this Agreement
shall have a market value of at least $500 million ($500,000,000); such
assets shall be valued as of the end of each calendar quarter and to
the extent that the market value of such assets is less than $450
million ($450,000,000), the Company shall make sufficient assets
subject to this Agreement so that the market value of Company's
investment assets subject to this Agreement is at
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<PAGE> 108
least $450 million ($450,000,000). To the extent that the market value
of such assets is more than $550 million ($550,000,000), Company may make
assets having a market value equal to such excess no longer subject to
this Agreement. For purposes of this Section 1.2, "market value" shall
be determined pursuant to Section 4.1 hereof.
C. Custody and control of the securities and all other assets
comprising Company's investment portfolio shall at all times be subject
to the direction and control of Company, acting through its Board of
Directors or an appropriate committee thereof. All purchases and sales
of securities shall be in the name of Company, Ohio Casualty
Corporation, or a direct or indirect subsidiary of Ohio Casualty
Corporation and all certificates or other instruments representing its
investments shall be held in account at qualified depository
institutions or in book form where appropriate. Such securities will
be held in accounts segregated from those of American or its
affiliates.
D. American agrees that the investment services it furnishes will
be in accordance with general investment policies, objectives,
directions and guidelines established from time to time by the Board of
Directors of Company or an appropriate committee thereof. The relevant
portions of Company's current investment guidelines are attached.
These provisions will change from time to time and Company, as soon as
possible, will forward such changes to American which shall then comply
with any revisions.
E. Notwithstanding Section 1.1 above, American shall not invest
any of such investment funds in securities of AFG or any of its
subsidiaries or any entity controlled by any of them, nor shall it
invest such funds in any investment opportunity which was previously
made available to and declined by AFG, without first obtaining the
written approval of Company's Chief Investment Officer, presently David
Wissinger.
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<PAGE> 109
II. PURCHASE AND SALE OF SECURITIES.
-------------------------------
American shall place all orders for the purchase and sale of portfolio
securities for Company accounts with brokers or dealers selected by
American and shall seek to execute portfolio transactions on terms
which are advantageous to Company in selecting brokers or dealers to
execute transactions. American shall not be obligated to solicit
competitive bids or seek the lowest available commission cost. All
trades by American of portfolio securities of Company shall be reported
to Company's Asset Administration Department by 11:00 A.M. on the first
business day following the trade.
III. INVESTMENT FEES; EXPENSES.
-------------------------
A. Company shall pay to American an annual fee for investment
services rendered under this Agreement equal to .12% (twelve basis
points) of assets under management based on the market value of such
assets. The fee shall be computed and paid on a quarterly basis
measured as of the end of the preceding calendar quarter. The amount
of assets under management shall be determined based on the market
value of the portfolio securities. The quarterly portion of each such
fee shall be paid within ten (10) days after the end of each calendar
quarter or portion thereof in which services are rendered under this
Agreement.
B. American shall furnish at its own expense necessary executive
and other personnel for providing investment services to Company.
Company shall be responsible for the expenses of (a) brokerage
commissions, issue and transfer taxes and other costs in connection
with securities transactions to which Company is a party, including any
portion of such commissions attributable to research and brokerage
services, (b) taxes payable by Company to federal, state and other
governmental agencies, and (c) custodial fees and expenses.
IV. REPORTS AND RECORDS.
-------------------
A. American shall maintain adequate records relating to the
furnishing of investment services under this Agreement, including those
with respect to the acquisition and disposition of securities.
American shall provide to Company such oral or written reports as to
its services provided under this Agreement as Company shall reasonably
require. The amount of assets under management shall be determined by
finding the market value per IDSI pricing tape of the portfolio
securities; provided, however, in the event that any asset under
management is not included on the IDSI pricing tape, the market value
of such asset shall be valued as mutually agreed upon by Company and
American.
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<PAGE> 110
All records maintained pursuant to this Agreement shall be
deemed the property of Company and shall be subject to examination by
Company and by persons authorized by it, or by governmental
authorities, at all times upon reasonable notice. Except as expressly
authorized in this Agreement or directed by Company in writing,
American shall keep confidential such records and other information
obtained by reason of this Agreement. Upon termination of this
Agreement, American shall promptly return all such records to Company.
V. NON-EXCLUSIVITY OF SERVICES.
---------------------------
The services of American to be provided hereunder are not to be deemed
exclusive and American shall be free to provide similar services for
its own account and the accounts of others, provided that such services
do not materially interfere with services to be rendered hereunder.
VI. LIABILITY; INDEMNIFICATION.
--------------------------
Neither American nor any of its directors, officers or employees or
other persons affiliated with American shall have any liability
hereunder for any act, omission, misstatement or error in judgment in
the course of, or in connection with, providing investment advisory
services under this Agreement, or for any losses that may be sustained
from such investment advisory services, and Company shall indemnify and
hold harmless American and its directors, officers, employees and other
affiliated persons from and against any and all liability, claims and
damages arising from or in connection with providing such services
hereunder; provided, however, that the foregoing shall not relieve
American or any of such other persons from liability for gross
negligence, willful misfeasance or illegal conduct in providing such
services.
VII. TERMINATION; RENEGOTIATION.
--------------------------
This Agreement shall remain in effect for a period of five (5) years
from the date it is effective and thereafter may be terminated by any
party hereto at any time upon ninety (90) days written notice to the
other party's normal business address. Company may terminate the
Agreement prior to the end of the term if (i) American has committed
gross negligence, willful misfeasance or has engaged in illegal conduct
in providing the investment services to Company or (ii) both John
Berding and William Effler are no longer employed by American or an
affiliate of American providing services to Company hereunder unless
successors to them are consented to by Company, which consent shall not
be unreasonably withheld. Upon termination of this Agreement, Company
shall pay pro rata any investment fees due for any
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portion of a calendar quarter within ten (10) days following the date of
termination.
8. NOTICES.
-------
Notices or other writings given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent
if delivered to the party at its address listed below in person or by
telex or telecopy or within two (2) days of mailing if mailed postage
prepaid to such address. The addresses of the parties are:
The Ohio Casualty Insurance Company
136 North Third Street
Hamilton, Ohio 45025
Attention: President
American Money Management Corporation
One East Fourth Street
Cincinnati, Ohio 45202
Attention: President
Each party may change its address by giving notices as herein required.
9. SOLE INSTRUMENT.
---------------
This instrument and the investment guidelines referred to in Section
1.3 constitute the sole and only agreement of the parties hereto
relating to the subject matter hereof, and correctly sets forth the
rights, duties, and obligations of each party to the other as of its
date.
10. WAIVER OR MODIFICATION.
----------------------
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged.
11. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
12. ASSIGNMENT.
----------
No party to this Agreement shall have the right to sell, transfer,
delegate, or assign this Agreement or any of its rights or duties
hereunder to any person,
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<PAGE> 112
firm or corporation at any time during the term hereof, and any proposed
assignee shall acquire no rights nor be able to assume any obligations
unless the written consent of the other party to this Agreement is given
before such assignment or delegation takes place. However, subject to
this paragraph, this Agreement binds and inures to the benefit of its
parties, their successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
as of December 1, 1998.
THE OHIO CASUALTY INSURANCE
COMPANY
By: /s/ Lauren N. Patch
------------------------------
Name: Lauren N. Patch
Title: President
AMERICAN MONEY MANAGEMENT
CORPORATION
By: /S/ James C. Kennedy
------------------------------
Name: James C. Kennedy
Title: Secretary
112
<PAGE> 113
Exhibit 2(h)
Software License Agreement,
dated December 1, 1998, between The Ohio Casualty Insurance Company
and Great American Insurance Company
113
<PAGE> 114
SOFTWARE LICENSE AGREEMENT
--------------------------
THIS SOFTWARE LICENSE AGREEMENT ("Agreement") made and entered into
this 1st day of December, 1998 by and between GREAT AMERICAN INSURANCE
COMPANY, an Ohio corporation ("Licensor") and THE OHIO CASUALTY INSURANCE
COMPANY, an Ohio corporation ("Ohio Casualty").
WITNESSETH:
WHEREAS, Licensor and Ohio Casualty are parties to an Asset Purchase
Agreement dated September 14, 1998 (the "Asset Purchase Agreement") by and
among Ohio Casualty, Licensor, American National Fire Insurance Company,
American Alliance Insurance Company, Agricultural Excess and Surplus Insurance
Company, Agricultural Insurance Company, American Dynasty Surplus Lines
Insurance Company, American Spirit Insurance Company, Contemporary American
Insurance Company, Eagle American Insurance Company, Eden Park Insurance
Company and Seven Hills Insurance Company, Great Texas County Mutual Insurance
Company, and Great American Lloyd's Insurance Company (collectively, the
"Sellers") pursuant to which Ohio Casualty, subject to the conditions thereof,
will purchase certain assets used in Sellers' insurance businesses; and
WHEREAS, the Asset Purchase Agreement provides that Licensor shall
grant to Ohio Casualty a license for the use of certain Software, as defined
herein, on computer systems maintained and operated by Ohio Casualty.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual promises contained herein, the parties agree as follows.
1. Definitions.
-----------
(a) "Software". The computer software programs owned by
--------
any of the Sellers, used and necessary in the conduct of the Business and
identified on Schedule 3.13 of the Asset Purchase Agreement.
(b) "Third Party Software". The computer software programs
--------------------
owned and licensed by third parties to Licensor, that are necessary for use in
the operation of certain Software that cannot operate as a stand-alone program
in the manner used by Licensor prior to the grant of the License (as defined
in Section 2).
(c) "Ohio Casualty". Ohio Casualty and its affiliates (as
-------------
defined by Rule 12b-2 of the regulations promulgated under the Securities
Exchange Act of 1934).
2. License. Subject to the provisions of Section 9, Licensor
-------
grants to Ohio Casualty a perpetual, non-exclusive license (the "License") to
use the Software in its
114
<PAGE> 115
operations on computer processing systems maintained and operated by Ohio
Casualty. Without limiting the generality of Section 6 of this Agreement,
Ohio Casualty shall not sublicense the Software to, or otherwise permit the
Software to be used by, any unrelated third party. From time to time after
the date of this Agreement but no more frequently than quarterly, Ohio
Casualty shall be entitled to receive from Sellers upon Ohio Casualty's
request a copy of the Software, the source code of the Software and
any documentation relating to the Software. The License shall include the
right of Ohio Casualty to modify and otherwise improve the Software.
Anything contained in this Agreement to the contrary notwithstanding,
this Agreement is not applicable to the provision by Sellers to Ohio Casualty
of Basic Services on computer processing systems maintained and operated by or
for Sellers pursuant to the terms of the Information Systems Agreement among
Ohio Casualty and Sellers of even date herewith.
The parties recognize that some of the Third Party Software
used by the Licensor prior to the date of this Agreement in connection with
the Software has restrictions on the assignment of licenses of such Third
Party Software. In situations where Licensor is unable to grant licenses to
the Third Party Software, Ohio Casualty acknowledges that it will need to
purchase licenses to the Third Party Software such that Ohio Casualty will
have its own separate licenses to use such Third Party Software in connection
with its use of the Software.
3. Term. This license shall continue in perpetuity unless
----
terminated in accordance with Section 9 of this Agreement. At the termination
of this Agreement, upon the request of Licensor, the Software and all copies
thereof and documentation relating thereto promptly shall be returned to or
destroyed by Licensor.
4. License Fee. Ohio Casualty shall pay no monetary consideration
-----------
to Licensor for the License. Licensor hereby acknowledges that the grant of
this License to Ohio Casualty is necessary to consummate the transactions
contemplated by the Asset Purchase Agreement.
5. Ownership. The Software and all copies thereof and all
---------
documentation and knowhow relating thereto are proprietary to Licensor and all
right, title and interest thereto (excepting only the same rights created by
this Agreement) shall remain in Licensor. All applicable rights to patents,
copyrights, trademarks and trade secrets in the Software are and shall remain
in Licensor. Notwithstanding the foregoing, Ohio Casualty shall have all
right, title and interest to the intellectual property rights for any
modifications or improvements it makes to the Software.
6. Confidentiality. Ohio Casualty shall not sell, transfer,
---------------
publish, disclose, display or otherwise make available the Software or copies
thereof to
116
<PAGE> 117
unrelated third parties. Ohio Casualty shall inform its employees and
consultants who are permitted access to the Software of Ohio Casualty's
confidentiality obligations hereunder. In order to protect Licensor's trade
secrets and copyrights in the Software, Ohio Casualty agrees to reproduce and
incorporate trade secret or copyright notices on all copies of the Software,
as and when requested by Licensor.
7. Maintenance. Licensor shall not be required to provide to Ohio
-----------
Casualty any maintenance services, technical support, debugging services or
other related upkeep of or with respect to the Software except as provided in
the Information Systems Agreement between Sellers and Ohio Casualty dated as
of the date of this Agreement.
8. Disclaimer of Warranty. LICENSOR IS LICENSING THE SOFTWARE TO
----------------------
OHIO CASUALTY "AS IS" AND "WITH ALL FAULTS AND DEFECTS" AND HEREBY EXPRESSLY
DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES OF ANY NATURE WHATSOEVER,
SPECIFICALLY INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
9. Termination. Licensor shall have the right to terminate this
-----------
Agreement and license upon thirty (30) days' prior written notice in the event
that Ohio Casualty violates any material provision of this Agreement. In the
event of such termination, Ohio Casualty shall return to Licensor or destroy
the Software and all copies thereof and all documentation relating thereto
upon request of the Licensor. Termination of this Agreement shall not relieve
Ohio Casualty of its obligations under Section 6 of this Agreement. Any
provisions of this Agreement which contemplate continued performance of either
party subsequent to the termination of this Agreement will survive such
termination.
10. Indemnification.
---------------
(a) Indemnification of Ohio Casualty. Licensor shall
--------------------------------
indemnify and defend Ohio Casualty and hold Ohio Casualty harmless from and
against any claims or suits and shall pay all damages or any settlements
sustained and all related costs (including Ohio Casualty's reasonable
attorney's fees) if Ohio Casualty is called upon to defend any United States
patent, trade secret or copyright infringement claim involving the Software;
provided, however, that Ohio Casualty gives Licensor prompt notice of any such
claim and permits Licensor to have sole control over defense and settlement of
the claim.
(b) Indemnification of Licensor. It is understood that
---------------------------
Ohio Casualty, and not Licensor, shall be responsible in all respects for all
uses made in connection with Ohio Casualty's use of the Software on computer
processing systems maintained and operated by Ohio Casualty, and Ohio Casualty
shall indemnify and defend Licensor and hold Licensor harmless from and
against any
116
<PAGE> 117
claims or suits and shall pay all damages or any settlements sustained and
all related costs (including Licensor's reasonable attorney's fees) resulting
from such uses; provided, however, that Licensor gives Ohio Casualty prompt
notice of any such claim and permits Ohio Casualty to have sole control over
defense and settlement of the claim. Additionally, except for infringement
claims brought against Ohio Casualty or Ohio Casualty's clients, Ohio Casualty
shall indemnify and defend Licensor and hold it harmless from and against any
claims or suits and shall pay all damages or any settlement sustained and all
related costs (including reasonable attorney's fees) regardless of the form of
action, in any action brought against Licensor by any of Ohio Casualty's
clients arising out of or in connection with this Agreement; provided, however,
that Licensor gives Ohio Casualty prompt notice of any such claim and permits
Ohio Casualty to have sole control over the defense and settlement of the
claim.
11. Ohio Casualty Representations; Indemnification. Ohio Casualty
----------------------------------------------
hereby represents and warrants that:
(a) Ohio Casualty has the requisite power (corporate or
otherwise) and capacity to enter into this Agreement to carry out and perform
its obligations under the terms of this Agreement;
(b) The execution, delivery and performance by Ohio
Casualty of this Agreement and the consummation of the transactions
contemplated hereunder have been duly authorized by all necessary actions on
the part of Ohio Casualty, and this Agreement is a valid and binding
obligation of Ohio Casualty, enforceable in accordance with its terms; and
(c) No consent or approval is required in connection with
the valid execution, delivery and performance of this Agreement by Ohio
Casualty.
Ohio Casualty shall defend, save harmless and indemnify Licensor, its
successors and assigns, officers, directors, employees and agents against all
liabilities, claims, damages (excluding, however, consequential damages) or
costs arising from a breach of any of the representations and warranties set
forth above by Ohio Casualty to Licensor, including, expenses of litigation
and legal fees.
12. Licensor Representations; Indemnification. Licensor hereby
-----------------------------------------
represents and warrants that:
(a) Licensor has the requisite power (corporate or
otherwise) and capacity to enter into this Agreement to carry out and perform
its obligations under the terms of this Agreement;
(b) The execution, delivery and performance by Licensor of
this Agreement and the consummation of the transactions contemplated hereunder
have
117
<PAGE> 118
been duly authorized by all necessary actions on the part of Licensor, and
this Agreement is a valid and binding obligation of Licensor, enforceable
in accordance with its terms; and
(c) No consent or approval is required in connection with
the valid execution, delivery and performance of this Agreement by Licensor.
Licensor shall defend, save harmless and indemnify Ohio Casualty, its
successors and assigns, officers, directors, employees and agents against all
liabilities, claims, damages (excluding, however, consequential damages) or
costs arising from a breach of any of the representations and warranties set
forth above by Licensor to Ohio Casualty, including, expenses of litigation
and legal fees.
13. Miscellaneous.
-------------
(a) This Agreement may not be amended except in a writing
executed by both parties.
(b) For the purpose of any notice required to be given by
this Agreement or under any applicable provision of the law, Licensor and Ohio
Casualty represent that their principal places of business are the following:
Ohio Casualty: The Ohio Casualty Insurance Company
136 North Third Street
Hamilton, Ohio 45025
Attn: Chief Executive Officer
with a concurrent copy to: Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
Licensor: Great American Insurance Company
580 Walnut Company
Cincinnati, Ohio 45202
Attn: President
with a concurrent copy to: Keating, Muething & Klekamp, P.L.L.
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Edward E. Steiner, Esq.
(c) Dates or times by which Licensor is required to make
performance under this Agreement shall be postponed automatically to the
extent
118
<PAGE> 119
that Licensor is prevented from meeting them by causes beyond its reasonable
control.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(e) This Agreement constitutes the complete statement of
the Agreement between the parties, and supersedes all prior proposals,
understandings and all other agreements, oral and written, between the parties
relating to this Agreement.
(f) This Agreement does not create any agency, joint
venture, employee or employee relationship between Licensor and Ohio Casualty.
Ohio Casualty and Licensor are at all times independent contractors and
neither party has the authority to legally obligate the other party.
(g) Any notices required or sent hereunder shall be mailed
by certified mail, delivered personally or sent via next day courier to the
respective addresses indicated in the introductory statement above for each
party.
(h) This Agreement may be executed in one or more
counterparts, each of which counterpart shall be deemed to be an original and
all of which, when taken together, shall constitute a single agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE TO
FOLLOW.]
119
<PAGE> 120
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first noted above.
OHIO CASUALTY:
THE OHIO CASUALTY INSURANCE
COMPANY
BY: /s/ Lauren N. Patch
------------------------------
NAME: Lauren N. Patch
----------------------------
ITS: President
-----------------------------
LICENSOR:
GREAT AMERICAN INSURANCE
COMPANY
BY: /s/ Karen Holley Horrell
------------------------------
NAME: Karen Holley Horrell
----------------------------
ITS: Senior Vice President
----------------------------
120
<PAGE> 121
EXHIBIT A
Software Programs
-----------------
See Schedule 3.13 of the Asset Purchase Agreement.
121
<PAGE> 122
Exhibit 2(i)
Database License Agreement,
dated December 1, 1998, between The Ohio Casualty Insurance Company
and Great American Insurance Company
122
<PAGE> 123
DATABASE LICENSE AGREEMENT
--------------------------
THIS DATABASE LICENSE AGREEMENT ("Agreement") made and entered into
this 1st day of December, 1998 by and between GREAT AMERICAN INSURANCE
COMPANY, an Ohio corporation ("Licensor") and THE OHIO CASUALTY INSURANCE
COMPANY, an Ohio corporation ("Ohio Casualty").
WITNESSETH:
WHEREAS, Licensor and Ohio Casualty are parties to an Asset Purchase
Agreement dated September 14, 1998 (the "Asset Purchase Agreement") by and
among Ohio Casualty, Licensor, American National Fire Insurance Company,
American Alliance Insurance Company, Agricultural Excess and Surplus Insurance
Company, Agricultural Insurance Company, American Dynasty Surplus Lines
Insurance Company, American Spirit Insurance Company, Contemporary American
Insurance Company, Eagle American Insurance Company, Eden Park Insurance
Company, Seven Hills Insurance Company, Great Texas County Mutual Insurance
Company and Great American Lloyd's Insurance Company (collectively, the
"Sellers") pursuant to which Ohio Casualty, subject to the conditions thereof,
will purchase certain assets used in Sellers' insurance businesses; and
WHEREAS, the Asset Purchase Agreement provides that Licensor shall
grant to Ohio Casualty a license for the use of the Database (the "Licensed
Database")(as defined below).
NOW THEREFORE, in consideration of the foregoing premises and the
mutual promises contained herein, the parties agree as follows.
1. Definitions.
-----------
(a) "Licensed Database". The records, data, files,
-----------------
reports, forms and other data owned by each of the Sellers and used and
necessary in the conduct of the Business (as defined in the Asset Purchase
Agreement) which shall be licensed by Licensor to Ohio Casualty under the
terms of the Asset Purchase Agreement.
(b) "Ohio Casualty". Ohio Casualty and its affiliates (as
-------------
defined by Rule 12b-2 of the regulations promulgated under the Securities
Exchange Act of 1934).
2. License. Licensor hereby grants to Ohio Casualty a perpetual,
-------
royalty-free license (the "License") to use the Licensed Database in its
operations in accordance with the provisions of the Asset Purchase Agreement.
Ohio Casualty shall be entitled from time-to-time to request and obtain from
GAIC a then-current copy of the Database. The License shall include the right
of Ohio Casualty to modify or otherwise change the Database.
123
<PAGE> 124
3. Term. This license shall continue in perpetuity unless terminated
----
by mutual agreement of the parties.
4. License Fee. Ohio Casualty shall pay no monetary consideration
-----------
to Licensor for the License. Licensor hereby acknowledges that the grant of
this License to Ohio Casualty is necessary to consummate the transactions
contemplated by the Asset Purchase Agreement.
5. Ownership. All right, title and interest to the Licensed
---------
Database (excepting only the same rights created by this Agreement) shall
remain in Licensor. Notwithstanding the foregoing, Ohio Casualty shall have
all right, title and interest to the intellectual property rights for any
modification or improvements it makes to the Licensed Database.
6. Restrictions on Use of Licensed Database by GAIC, GAIC shall
------------------------------------------------
not sell, transfer, publish, disclose, display or otherwise make available the
Licensed Database or copies thereof or license or grant rights to the Licensed
Database to unrelated third parties. GAIC shall inform its employees and
consultants who are permitted access to the Licensed Database of GAIC's
confidentiality obligations hereunder. GAIC shall use the Licensed Database
only for providing the services under the Information Systems Agreement (as
defined in the Asset Purchase Agreement) and for its own internal business
purposes, including but not limited to regulatory and governmental purposes.
7. Maintenance. Licensor shall not be required to provide to Ohio
-----------
Casualty any maintenance services, technical support, debugging services or
other related upkeep of or with respect to the Licensed Database, except as
provided in the Information Systems Agreement between Sellers and Ohio
Casualty dated as of the date of this Agreement.
8. Disclaimer of Warranty. Except as otherwise provided in
----------------------
Section 11 hereof, LICENSOR IS LICENSING THE LICENSED DATABASE TO LICENSEE
"AS IS" AND "WITH ALL FAULTS AND DEFECTS" AND HEREBY EXPRESSLY DISCLAIMS ALL
EXPRESS OR IMPLIED WARRANTIES OF ANY NATURE WHATSOEVER, SPECIFICALLY INCLUDING
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. Indemnification.
---------------
(a) Indemnification of Ohio Casualty. It is understood that
--------------------------------
GAIC, and not Ohio Casualty, shall be responsible for GAIC's use of the
Licensed Database. Licensor shall indemnify and defend Ohio Casualty and hold
Ohio Casualty harmless from and against any claims or suits and shall pay all
damages
124
<PAGE> 125
or any settlements sustained and all related costs (including Ohio Casualty's
reasonable attorney's fees) resulting from GAIC's use of the Licensed
Database. Ohio Casualty shall give Licensor prompt notice of any such claim
and shall permit Licensor to have sole control over defense and settlement of
the claim.
(b) Indemnification of Licensor. It is understood that
---------------------------
Ohio Casualty, and not Licensor, shall be responsible in all respects for all
uses made in connection with Ohio Casualty's use of the Licensed Database, and
Ohio Casualty shall indemnify and defend Licensor and hold Licensor harmless
from and against any claims or suits and shall pay all damages or any
settlements sustained and all related costs (including Licensor's reasonable
attorney's fees) resulting from such uses. Licensor shall give Ohio Casualty
prompt notice of any such claim and shall permit Ohio Casualty to have sole
control over defense and settlement of the claim.
10. Ohio Casualty Representations; Indemnification. Ohio Casualty
----------------------------------------------
hereby represents and warrants that:
(a) Ohio Casualty has the requisite power (corporate or
otherwise) and capacity to enter into this Agreement to carry out and perform
its obligations under the terms of this Agreement; and
(b) The execution, delivery and performance by Ohio
Casualty of this Agreement and the consummation of the transactions
contemplated hereunder have been duly authorized by all necessary actions on
the part of Ohio Casualty, and this Agreement is a valid and binding
obligation of Ohio Casualty, enforceable in accordance with its terms.
Ohio Casualty shall defend, save harmless and indemnify Licensor, its
successors and assigns, officers, directors, employees and agents against all
liabilities, claims, damages (excluding, however, consequential damages) or
costs arising from a breach of any of the representations and warranties set
forth above by Ohio Casualty to Licensor, including, expenses of litigation
and legal fees.
11. Licensor Representations; Indemnification. Licensor hereby
-----------------------------------------
represents and warrants that:
(a) Licensor has the requisite power (corporate or
otherwise) and capacity to enter into this Agreement to carry out and perform
its obligations under the terms of this Agreement;
(b) Licensor owns the Licensed Database free and clear of
any Liens (as defined in the Asset Purchase Agreement); and
(c) The execution, delivery and performance by Licensor of
this Agreement and the consummation of the transactions contemplated hereunder
have
125
<PAGE> 126
been duly authorized by all necessary actions on the part of Licensor, and
this Agreement is a valid and binding obligation of Licensor, enforceable
in accordance with its terms.
Licensor shall defend, save harmless and indemnify Ohio Casualty, its
successors and assigns, officers, directors, employees and agents against all
liabilities, claims, damages (excluding, however, consequential damages) or
costs arising from a breach of any of the representations and warranties set
forth above by Licensor to Ohio Casualty, including, expenses of litigation
and legal fees.
12. Miscellaneous.
-------------
(a) This Agreement may not be amended except in a writing
executed by both parties.
(b) For the purpose of any notice required to be given by
this Agreement or under any applicable provision of the law, Licensor and Ohio
Casualty represent that their principal places of business are the following:
Licensor: Great American Insurance Company
580 Walnut Company
Cincinnati, Ohio 45202
Attn: President
with a concurrent copy to:
Keating, Muething & Klekamp, P.L.L.
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Edward E. Steiner, Esq.
Ohio Casualty: The Ohio Casualty Insurance Company
136 North Third Street
Hamilton, Ohio 45025
Attn: Chief Executive Officer
with a concurrent copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
Attn: James A. Yano, Esq.
126
<PAGE> 127
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(d) This Agreement constitutes the complete statement of
the Agreement between the parties, and supersedes all prior proposals,
understandings and all other agreements, oral and written, between the parties
relating to this Agreement.
(e) This Agreement does not create any agency, joint
venture, employee or employee relationship between Licensor and Ohio Casualty.
Ohio Casualty and Licensor are at all times independent contractors and
neither party has the authority to legally obligate the other party.
(f) Any notices required or sent hereunder shall be mailed
by certified mail, delivered personally or sent via next day courier to the
respective addresses indicated in the introductory statement above for each
party.
(g) This Agreement may be executed in one or more
counterparts, each of which counterpart shall be deemed to be an original and
all of which, when taken together, shall constitute a single agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE TO
FOLLOW.]
127
<PAGE> 128
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first noted above.
THE OHIO CASUALTY INSURANCE
COMPANY
BY: /s/ Lauren N. Patch
------------------------------
NAME: Lauren N. Patch
----------------------------
ITS: President
-----------------------------
GREAT AMERICAN INSURANCE
COMPANY
BY: /s/ Karen Holley Horrell
------------------------------
NAME: Karen Holley Horrell
----------------------------
ITS: Senior Vice President
-----------------------------
128
<PAGE> 129
Exhibit 4(a)
Certificate of Amended Articles of Incorporation of Registrant
as filed with the Ohio Secretary of State on May 25, 1983
129
<PAGE> 130
CERTIFICATE OF AMENDED ARTICLES OF INCORPORATION
OF
OHIO CASUALTY CORPORATION
John G. Sloneker, who is Chairman of the Board, and William L.
Woodall, who is Secretary of the above named Ohio corporation for profit, do
hereby certify that at a meeting on the 19th day of May, 1983, the holders of
all shares of voting stock and at which a quorum of said stockholders were
present in person or by proxy, did by an affirmative vote of two-thirds (2/3)
of the outstanding stock, adopt the following resolution amending the existing
Articles of Incorporation and any amendments thereto:
RESOLVED, that the Articles of Incorporation of
Ohio Casualty Corporation be, and the same
hereby are, amended by deleting the same in
their entirety and by adopting and substituting
the Amended Articles to be and constitute the
Articles of the corporation.
The following Amended Articles were adopted to supersede and
take the place of the existing Articles and all amendments thereto:
AMENDED ARTICLES OF INCORPORATION
OF
OHIO CASUALTY CORPORATION
FIRST: The name of the corporation shall be Ohio Casualty
Corporation.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is the City of Hamilton, County of Butler.
THIRD: The purpose for which the corporation is formed is to
engage in any lawful act or activity for which corporations may be formed
under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation
shall be 20,000,000, each with a par value of Twenty-Five Cents ($.25).
130
<PAGE> 131
FIFTH: The Board of Directors of the corporation, when
evaluating any offer of another party to (A) purchase or otherwise acquire all
or substantially all of the properties or assets of the corporation, (B) merge
or consolidate the corporation with or into another corporation or another
person, or (C) make a tender or exchange offer for any equity security of the
corporation, may, in connection with the exercise of its judgment in
determining what is in the best interests of the corporation and its
shareholders, give due consideration to all relevant factors, including
without limitation (1) the social and economic effects of the proposed
transaction on the employees, shareholders and other constituents of the
corporation and its subsidiaries and on the communities in which the
corporation and its subsidiaries operate or are located, (2) the fairness of
the price or financial terms of the proposal, and (3) the relationship of the
proposal to the value of the corporation in a transaction of a similar type
resulting from arm's length negotiations.
SIXTH: The Board of Directors shall have the power to cause
the corporation from time to time to purchase, hold, sell, transfer or
otherwise deal with its own shares or with any security or other promissory
obligation which may be convertible into its own shares or may authorize the
holder thereof to purchase its own shares, but such authority shall not limit
the plenary authority of the Board of Directors to cause the corporation to
purchase, sell, transfer or otherwise deal with securities and other
promissory obligations which are not so convertible and do not so authorize.
SEVENTH: A director of this corporation shall not be
disqualified by his office from dealing or contracting with the corporation as
vendor, purchaser, employee, agent, or otherwise, nor shall any transaction or
contract or act of this corporation be void or voidable or in any way affected
or invalidated by reason of the fact that any director of any firm of which
any director is a member or any corporation of which any director is a
shareholder or director is in any way interested in such transaction or
contract or act, provided the fact that such director or such firm or such
corporation is so interested shall be disclosed or shall be known to the Board
of Directors or such members thereof as shall be present at any meeting of the
Board of Directors at which action upon any such contract or transaction or
act shall be taken; nor shall any such director be accountable or responsible
to the corporation for or in respect to any such transaction or contract or
act of this corporation or for any gains or profits realized by him by reason
of the fact that he or any firm of which he is a member or any corporation of
which he is a shareholder or director is interested in such transaction or
contract or act; and any such director may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
corporation which shall authorize or take action in respect of any such
contract or transaction or act, and may vote thereat to authorize, ratify or
approve any such contract or transaction or act, with like force and effect as
if he or any firm of which he is a member or any corporation of which
131
<PAGE> 132
he is a shareholder or director were not interested in such transaction or
contract or act.
EIGHTH: No shareholder of the corporation shall be entitled as
such, as a matter of right, to preempt or subscribe for or purchase shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other promissory obligations convertible into or exchangeable
for shares of the corporation or which by warrants or otherwise entitle the
holder thereof to subscribe for or purchase any such shares, except such
rights of subscription or purchase, if any, and at such price or prices and
upon such terms and conditions as the Board of Directors may from time to time
determine.
NINTH: The Board of Directors may adopt amendments in respect
of any unissued or treasury shares of any class and thereby fix or change:
the division of such shares into series and the designation and authorized
number of shares of each series; the dividend rate; the dates of payment of
dividends and the dates from which they are cumulative; liquidation price;
redemption price; sinking fund requirements; conversion rights, and rights on
the issuance of shares of any class or series.
TENTH: Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release of the holders
of shares of the corporation entitling them to exercise two-thirds (2/3) or
any other proportion of the voting power of the corporation or of any class or
classes thereof, such action, unless expressly otherwise provided by statute,
may be taken by the vote, consent, waiver or release of the holders of the
shares entitling them to exercise not less than a majority of the voting power
of the corporation or of such class or classes; provided, however, that unless
two-thirds (2/3) of the whole authorized number of directors of the
corporation shall recommend the approval of any of the following matters, the
affirmative vote of the holders of shares entitling them to exercise not less
than eighty percent (80%) of the voting power of the corporation entitled to
vote thereon shall be required to adopt:
(1) a proposed amendment to the articles of the corporation;
(2) proposed new regulations, or an alteration, amendment
or repeal of the regulations of the corporation;
(3) an agreement of merger or consolidation providing for
the merger or consolidation of the corporation with or
into one or more other corporations;
(4) a proposed combination or majority share acquisition
involving the issuance of shares of the corporation and
requiring shareholder approval;
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(5) a proposal to sell, lease or exchange all or
substantially all of the property and assets of the
corporation;
(6) a proposed dissolution of the corporation; or
(7) a proposal to fix or change the number of directors by
action of the shareholders of the corporation.
The written objection of a director to any such matter
submitted to the president or secretary of the corporation not less than three
days before the meeting of shareholders at which any such matter is to be
considered shall be deemed to be an affirmative vote by such director against
such matter.
ELEVENTH: (A) In addition to any affirmative vote required by
any provision of the Ohio Revised Code or by any other provision hereof, the
affirmative vote or consent of the holders of the greater of (a) four-fifths
(4/5) of the outstanding common shares of the corporation entitled to vote
thereon or (b) that fraction of such outstanding common shares having as the
numerator a number equal to the sum of (i) the number of outstanding common
shares Beneficially Owned by Controlling Persons (as hereinafter defined) plus
(ii) two-thirds (2/3) of the remaining number of outstanding common shares,
and as the denominator a number equal to the total number of outstanding
common shares entitled to vote, shall be required for the adoption or
authorization of a Business Combination (as hereinafter defined) unless:
(1) The Business Combination will result in an involuntary
sale, redemption, cancellation or other termination of ownership of all common
shares of the corporation owned by shareholders who do not vote in favor of,
or consent in writing to, the Business Combination and the cash or fair value
of other readily marketable consideration to be received by such shareholders
for such shares shall at least be equal to the Minimum Price Per Share (as
hereinafter defined); and
(2) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 shall be mailed to the shareholders of the
corporation for the purpose of soliciting shareholder approval of the proposed
Business Combination.
(B) For purposes of this Article ELEVENTH, the following
definitions shall apply:
(1) "Affiliate" shall mean a Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, another Person.
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(2) "Associate" shall mean (i) any corporation or
organization of which a Person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of ten percent (10%) or more of any class of
equity securities (ii) any trust or other estate in which a Person has a ten
percent (10%) or greater individual interest of any nature or as to which a
Person serves as trustee or in a similar fiduciary capacity, (iii) any spouse
of a Person, and (iv) any relative of a Person, or any relative of a spouse of
a Person, who has the same residence as such Person or spouse.
(3) "Beneficial Ownership" shall include without limitation
(i) all shares directly or indirectly owned by a Person, by an Affiliate of
such Person or by an Associate of such Person or such Affiliate, (ii) all
shares which such Person, Affiliate or Associate has the right to acquire
through the exercise of any option, warrant or right (whether or not currently
exercisable), through the conversion of a security, pursuant to the power to
revoke a trust, discretionary account or similar arrangement, or pursuant to
the automatic termination of a trust, discretionary account or similar
arrangement, and (iii) all shares as to which such Person, Affiliate or
Associate directly or indirectly through any contract, arrangement,
understanding, relationship or otherwise (including without limitation any
written or unwritten agreement to act in concert) has or shares voting power
(which includes the power to vote or to direct the voting of such shares) or
investment power (which includes the power to dispose or to direct the
disposition of such shares) or both.
(4) "Business Combination" shall mean (i) any merger or
consolidation of the corporation with or into a Controlling Person or an
Affiliate of a Controlling Person or an Associate of such Controlling Person
or Affiliate, (ii) any sale, lease, exchange, transfer or other disposition,
including without limitation a mortgage or any other security device of all
or any Substantial Part of the assets of the corporation, including without
limitation any voting securities of a Subsidiary, or of the assets of a
Subsidiary, to a Controlling Person or Affiliate of a Controlling Person or
Associate of such Controlling Person or Affiliate, (iii) any merger into the
corporation, or into a Subsidiary, of a Controlling Person or an Affiliate of
a Controlling Person or an Associate of such Controlling Person or Affiliate,
(iv) any sale, lease, exchange, transfer or other disposition to the
corporation or a Subsidiary of all or any part of the assets of a Controlling
Person or Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate but not including any dispositions of assets which, if
included with all other dispositions consummated during the same fiscal year
of the corporation by the same Controlling Person. Affiliates thereof and
Associates of such Controlling Person or Affiliates, would not result in
dispositions during such year by all such Persons of assets having an
aggregate fair value (determined at the time of disposition of the respective
assets) in excess of one percent (1%) of the total consolidated assets of the
corporation (as shown on its certified balance sheet as of the end of the
fiscal year preceding the proposed disposition); provided, however, that in no
event shall any disposition of
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assets be excepted from shareholder approval by reason of the preceding
exclusion if such disposition when included with all other dispositions
consummated during the same and immediately preceding four (4) fiscal years
of the corporation by the same Controlling Person, Affiliate thereof and
Associates of such Controlling Person or Affiliates, would result in
disposition by all such Persons of assets having an aggregate fair value
(determined at the time of disposition of the respective assets) in excess of
two percent (2%) of the total consolidated assets of the corporation (as shown
of its certified balance sheet as of the end of the fiscal year preceding the
proposed disposition), (v) any reclassification of the common shares of the
corporation, or any recapitalization involving common shares of the
corporation, consummated within five (5) years after a Controlling Person
becomes a Controlling Person, and (vi) any agreement, contract or other
arrangement providing for any of the transactions described in the definition
of Business Combination.
(5) "Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
(6) "Controlling Person" shall mean any Person who
Beneficially Owns shares of the corporation entitling that Person to exercise
twenty percent (20%) or more of the voting power of the corporation entitled
to vote in the election of directors.
(7) "Minimum Price Per Share" shall mean the sum of (a) the
higher of (i) the highest gross per share price paid or agreed to be paid to
acquire any common shares of the corporation Beneficially Owned by a
Controlling Person, provided such payment or agreement to make payment was
made within five (5) years immediately prior to the record date set to
determine the shareholders entitled to vote or consent to the Business
Combination in question, or (ii) the highest per share closing public market
price for such common shares during such five (5) year period, plus (b) the
aggregate amount, if any, by which five percent (5%) for each year, beginning
on the date on which such Controlling Person became a Controlling Person, of
such higher per share price exceeds the aggregate amount of all common share
dividends per share paid in cash since the date on which such Person became a
Controlling Person. The calculation of the Minimum Price Per Share shall
require appropriate adjustments for capital changes, including without
limitation stock splits, stock dividends and reverse stock splits.
(8) "Person" shall mean an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, any
unincorporated organization a government or political subdivision thereof, and
any other entity.
(9) "Securities Exchange Act of 1934" shall mean the
Securities Exchange Act of 1934, as amended from time to time as well as any
successor or replacement statute.
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(10) "Subsidiary" shall mean any corporation more than
twenty-five percent (25%) of whose outstanding securities entitled to vote for
the election of directors are Beneficially Owned by the corporation and/or one
or more Subsidiaries.
(11) "Substantial Part" shall mean more than ten percent
(10%) of the total assets of the corporation in question, as shown on its
certified balance sheet as of the end of the most recent fiscal year ending
prior to the time the determination is being made.
(C) During any period in which there are one or more
Controlling Persons, this Article ELEVENTH shall not be altered, changed or
repealed unless the amendment effecting such alteration, change or repeal
shall have received, in addition to any affirmative vote required by any
provision of the Ohio Revised Code or by any other provisions hereof, the
affirmative vote or consent of the holders of the greater of (a) four-fifths
(4/5) of the outstanding common shares of the corporation entitled to vote
thereon or (b) that fraction of such outstanding common shares having as the
numerator a number equal to the sum of (i) the number of outstanding common
shares Beneficially Owned by Controlling Persons plus (ii) two-thirds (2/3) of
the remaining number of outstanding common shares, and as the denominator a
number equal to the total number of outstanding common shares entitled to
vote.
TWELFTH: These Amended Articles take the place of and
supersede the existing Articles of Ohio Casualty Corporation.
IN WITNESS WHEREOF, the above named officers, acting for and on
behalf of the corporation, have subscribed their names this 23rd day of May,
1983.
/s/ John G. Sloneker
--------------------------------------
John G. Sloneker, Chairman of the
Board
/s/ William L. Woodall
--------------------------------------
William L. Woodall, Secretary
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<PAGE> 137
Exhibit 4(b)
Certificate of Amendments to the Articles of Incorporation of the Registrant
as filed with the Ohio Secretary of State on November 21, 1986
137
<PAGE> 138
CERTIFICATE OF AMENDMENTS TO THE ARTICLES
OF INCORPORATION OF OHIO CASUALTY CORPORATION
---------------------------------------------
John G. Sloneker, who is Chairman of the Board, and William L.
Woodall, who is secretary of the Ohio Casualty Corporation, hereby certify
that the resolutions set forth immediately below were duly adopted at a
special meeting of shareholders held on November 20, 1986 by an affirmative
vote of the holders of shares entitling them to exercise a majority of the
voting power of the Company:
RESOLVED, that Article FOURTH of the Articles
of Incorporation of Ohio Casualty Corporation
be, and the same hereby is, amended by deleting
it in its entirety, and by adopting and
substituting in its place a new Article FOURTH,
which shall provide as follows:
FOURTH: The authorized number of
shares of the corporation shall be
70,000,000, each with a par value of
twelve and one-half cents ($.125). The
stated capital of each outstanding
share shall be equal to its par value.
RESOLVED, that the Articles of Incorporation of
Ohio Casualty Corporation be, and the same
hereby are, amended by adding an Article
THIRTEENTH, which article shall provide as
follows:
THIRTEENTH: Shareholders shall not
have the right to vote cumulatively in
the election of directors.
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<PAGE> 139
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of this 20th day of November, 1986.
/s/ John G. Sloneker
--------------------------------
John G. Sloneker,
Chairman of the Board
/s/ William L. Woodall
--------------------------------
William L. Woodall,
Secretary
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Exhibit 4(c)
Certificate of Amendment to Amended Articles of Incorporation of the
Registrant as filed with the Ohio Secretary of State on April 29, 1992
140
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CERTIFICATE
OF
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
OF
OHIO CASUALTY CORPORATION
-------------------------------------------
The undersigned hereby certify that: (a) they are the duly elected,
qualified and acting President and Secretary, respectively, of Ohio Casualty
Corporation, an Ohio corporation (the "Company"); (b) the amendment to
Article FOURTH of the Amended Articles of Incorporation of the Company included
in the resolution attached hereto and incorporated herein by reference was
approved and recommended by the affirmative vote of at least two-thirds of the
whole authorized number of directors of the Company at a meeting duly called
and held on February 20, 1992, at which a quorum was at all times present; (c)
a meeting of the shareholders of the Company was duly called and held on April
15, 1992, at which meeting a quorum of shareholders was at all times present in
person or by proxy; and (d) the resolution attached hereto and incorporated
herein by reference was duly adopted at said meeting of shareholders by the
affirmative vote of the holders of shares entitled to exercise more than a
majority of the voting power of the Company on such resolution.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as
of this 15th day of April, 1992.
/s/ Lauren N. Patch
----------------------------------
Lauren N. Patch, President
/s/ Howard L. Sloneker III
----------------------------------
Howard L. Sloneker III, Secretary
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<PAGE> 142
RESOLVED, that Article FOURTH of the Company's
Amended Articles of Incorporation be, and it
hereby is, amended in its entirety to be as set
forth in Appendix A to the Company's Proxy
Statement dated March 9, 1992, which Appendix A
is incorporated in this resolution by reference.
Appendix A to the Company's Proxy Statement
dated March 9, 1992, is set forth below:
APPENDIX A
----------
FOURTH: The authorized number of shares of the corporation is
70,000,000 common shares, each with a par value of twelve and one-half cents
($.125) (designated as "common shares") and 2,000,000 preferred shares,
without par value (designated as "Preferred Shares"). The express terms of
the shares of each class are as follows:
(A) EXPRESS TERMS OF THE COMMON SHARES. The common shares
shall be subject to the express terms of the Preferred Shares and the express
terms of any series thereof. Each common share shall be equal to every other
common share. Subject to the provisions of applicable law and these Amended
Articles, each common share shall entitle the holder thereof to one vote on
each matter properly submitted to the shareholders for their vote, consent,
waiver, release or other action. Subject to any rights to receive dividends
or distributions to which the holders of Preferred Shares may be entitled, the
holders of common shares shall be entitled to receive such dividends or
distributions as may from time to time be declared by the Board of Directors
of the corporation.
(B) EXPRESS TERMS OF THE PREFERRED SHARES. The Preferred
Shares may be issued from time to time in one or more series. All Preferred
Shares shall be of equal rank and shall be identical, except in respect of the
terms that may be fixed or changed by the Board of Directors of the
corporation as hereinafter provided, and each share of a series of Preferred
Shares shall be identical with all other shares of such series, except as to
the dates from which dividends or distributions shall be cumulative. Subject
to the provisions of this paragraph (B), which provisions shall apply to all
Preferred Shares, the Board of Directors of the corporation is authorized to
cause shares of Preferred Shares to be issued in one or more series and with
respect to each such series to fix prior to the issuance of shares of such
series (and thereafter, to the extent provided in clause (2) of this paragraph
(B)) the following:
(1) The designation of the series, which may be by
distinguishing number, letter or title;
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<PAGE> 143
(2) The authorized number of shares of the series, which
number the Board of Directors of the corporation may (except to the extent
otherwise provided in the creation of the series) increase or decrease from
time to time before or after the issuance of shares of such series (but not
below the number of shares of such series then outstanding);
(3) The dividend or distribution rate of the series;
(4) The dates of payment of dividends or distributions and
the dates from which the dividends or distributions shall be cumulative;
(5) The amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the corporation;
(6) The redemption rights and price or prices for shares
of the series;
(7) The sinking fund requirements for the purchase or
redemption of shares of the series;
(8) The conversion rights of the shares of the series;
(9) The restrictions on the issuance of shares of the same
series or of any other class or series; and
(10) Such other terms as the Board of Directors may from
time to time be permitted by law to fix or change.
The Board of Directors of the corporation is authorized to
adopt from time to time amendments to these Amended Articles fixing or
changing, with respect to each such series, the matters described in the
preceding clauses (1) through (10), inclusive, of paragraph (B) above.
Subject to the provisions of applicable law and these Amended
Articles, each Preferred Share shall entitle the holder thereof to one vote on
each matter properly submitted to the shareholders for their vote, consent,
waiver, release or other action. Except as otherwise required by law or these
Amended Articles, the common shares and the Preferred Shares shall be voted
together as a single class.
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Exhibit 4(d)
Certificate of Amendment to Amended Articles of Incorporation of the
Registrant as filed with the Ohio Secretary of State on April 30, 1996
144
<PAGE> 145
CERTIFICATE
OF
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
OF
OHIO CASUALTY CORPORATION
----------------------------------------------
The undersigned hereby certify that: (a) they are the duly elected,
qualified and acting President and Secretary, respectively, of Ohio Casualty
Corporation, an Ohio corporation (the "Company"); (b) the amendment to Article
FOURTH of the Amended Articles of Incorporation of the Company included in the
resolution attached hereto and incorporated herein by reference was approved
and recommended by the affirmative vote of, and in writings signed by, all of
the directors of the Company; (c) a meeting of the shareholders of the Company
was duly called and held on April 17, 1996, at which meeting a quorum of
stockholders was at all times present in person or by proxy; and (d) the
resolution attached hereto and incorporated herein by reference was duly
adopted at said meeting of shareholders by the affirmative vote of the holders
of shares entitled to exercise more than a majority of the voting power of the
Company on such resolution.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
this 17th day of April, 1996.
/s/ Lauren N. Patch
-----------------------------------
Lauren N. Patch, President
/s/ Howard L. Sloneker III
-----------------------------------
Howard L. Sloneker III,Secretary
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<PAGE> 146
RESOLVED, that the first sentence of Article
FOURTH of the Company's Amended Articles of
Incorporation be, and it hereby is, amended to
be as follows, with all other provisions of
said Article FOURTH to remain unchanged:
FOURTH: The authorized number of shares of the corporation is
150,000,000 common shares, each with a par value of twelve and one-half cents
($.125) (designated as "common shares") and 2,000,000 preferred shares,
without par value (designated as "Preferred Shares").
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<PAGE> 147
Exhibit 4(e)
Amended Articles of Incorporation of the Registrant
(reflecting amendments through April 30, 1996)
[for SEC reporting compliance purposes only -- not filed with the Ohio
Secretary of State]
147
<PAGE> 148
AMENDED ARTICLES OF INCORPORATION
OF
OHIO CASUALTY CORPORATION
FIRST: The name of the corporation shall be Ohio Casualty
Corporation.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is the City of Hamilton, County of Butler.
THIRD: The purpose for which the corporation is formed is to
engage in any lawful act or activity for which corporations may be formed
under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation is
150,000,000 common shares, each with a par value of twelve and one-half cents
($.125) (designated as "common shares") and 2,000,000 preferred shares,
without par value (designated as "Preferred Shares").
(A) EXPRESS TERMS OF THE COMMON SHARES. The common shares
shall be subject to the express terms of the Preferred Shares and the express
terms of any series thereof. Each common share shall be equal to every other
common share. Subject to the provisions of applicable law and these Amended
Articles, each common share shall entitle the holder thereof to one vote on
each matter properly submitted to the shareholders for their vote, consent,
waiver, release or other action. Subject to any rights to receive dividends
or distributions to which the holders of Preferred Shares may be entitled, the
holders of common shares shall be entitled to receive such dividends or
distributions as may from time to time be declared by the Board of Directors
of the corporation.
(B) EXPRESS TERMS OF THE PREFERRED SHARES. The Preferred
Shares may be issued from time to time in one or more series. All Preferred
Shares shall be of equal rank and shall be identical, except in respect of the
terms that may be fixed or changed by the Board of Directors of the
corporation as hereinafter provided, and each share of a series of Preferred
Shares shall be identical with all other shares of such series, except as to
the dates from which dividends or distributions shall be cumulative. Subject
to the provisions of this paragraph (B), which provisions shall apply to all
Preferred Shares, the Board of Directors of the corporation is authorized to
cause shares of Preferred Shares to be issued in one or more series and with
respect to each such series to fix prior to the issuance of shares
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<PAGE> 149
of such series (and thereafter, to the extent provided in clause (2) of this
paragraph (B)) the following:
(1) The designation of the series, which may be by
distinguishing number, letter or title;
(2) The authorized number of shares of the series, which
number the Board of Directors of the corporation may (except to the extent
otherwise provided in the creation of the series) increase or decrease from
time to time before or after the issuance of shares of such series (but not
below the number of shares of such series then outstanding);
(3) The dividend or distribution rate of the series;
(4) The dates of payment of dividends or distributions and
the dates from which the dividends or distributions shall be cumulative;
(5) The amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the corporation;
(6) The redemption rights and price or prices for shares
of the series;
(7) The sinking fund requirements for the purchase or
redemption of shares of the series;
(8) The conversion rights of the shares of the series;
(9) The restrictions on the issuance of shares of the same
series or of any other class or series; and
(10) Such other terms as the Board of Directors may from
time to time be permitted by law to fix or change.
The Board of Directors of the corporation is authorized to
adopt from time to time amendments to these Amended Articles fixing or
changing, with respect to each such series, the matters described in the
preceding clauses (1) through (10), inclusive, of paragraph (B) above.
Subject to the provisions of applicable law and these Amended
Articles, each Preferred Share shall entitle the holder thereof to one vote on
each matter properly submitted to the shareholders for their vote, consent,
waiver, release or other action. Except as otherwise required by law or these
Amended Articles, the common shares and the Preferred Shares shall be voted
together as a single class.
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<PAGE> 150
FIFTH: The Board of Directors of the corporation, when
evaluating any offer of another party to (A) purchase or otherwise acquire all
or substantially all of the properties or assets of the corporation, (B) merge
or consolidate the corporation with or into another corporation or another
person, or (C) make a tender or exchange offer for any equity security of the
corporation, may, in connection with the exercise of its judgment in
determining what is in the best interests of the corporation and its
shareholders, give due consideration to all relevant factors, including
without limitation (1) the social and economic effects of the proposed
transaction on the employees, shareholders and other constituents of the
corporation and its subsidiaries and on the communities in which the
corporation and its subsidiaries operate or are located, (2) the fairness of
the price or financial terms of the proposal, and (3) the relationship of the
proposal to the value of the corporation in a transaction of a similar type
resulting from arm's length negotiations.
SIXTH: The Board of Directors shall have the power to cause
the corporation from time to time to purchase, hold, sell, transfer or
otherwise deal with its own shares or with any security or other promissory
obligation which may be convertible into its own shares or may authorize the
holder thereof to purchase its own shares, but such authority shall not limit
the plenary authority of the Board of Directors to cause the corporation to
purchase, sell, transfer or otherwise deal with securities and other
promissory obligations which are not so convertible and do not so authorize.
SEVENTH: A director of this corporation shall not be
disqualified by his office from dealing or contracting with the corporation as
vendor, purchaser, employee, agent, or otherwise, nor shall any transaction or
contract or act of this corporation be void or voidable or in any way affected
or invalidated by reason of the fact that any director of any firm of which
any director is a member or any corporation of which any director is a
shareholder or director is in any way interested in such transaction or
contract or act, provided the fact that such director or such firm or such
corporation is so interested shall be disclosed or shall be known to the Board
of Directors or such members thereof as shall be present at any meeting of the
Board of Directors at which action upon any such contract or transaction or
act shall be taken; nor shall any such director be accountable or responsible
to the corporation for or in respect to any such transaction or contract or
act of this corporation or for any gains or profits realized by him by reason
of the fact that he or any firm of which he is a member or any corporation of
which he is a shareholder or director is interested in such transaction or
contract or act; and any such director may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
corporation which shall authorize or take action in respect of any such
contract or transaction or act, and may vote thereat to authorize, ratify or
approve any such contract or transaction or act, with like force and effect as
if he or any firm of which he is a member or any corporation of which
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<PAGE> 151
he is a shareholder or director were not interested in such transaction or
contract or act.
EIGHTH: No shareholder of the corporation shall be entitled as
such, as a matter of right, to preempt or subscribe for or purchase shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other promissory obligations convertible into or exchangeable
for shares of the corporation or which by warrants or otherwise entitle the
holder thereof to subscribe for or purchase any such shares, except such
rights of subscription or purchase, if any, and at such price or prices and
upon such terms and conditions as the Board of Directors may from time to time
determine.
NINTH: The Board of Directors may adopt amendments in respect
of any unissued or treasury shares of any class and thereby fix or change:
the division of such shares into series and the designation and authorized
number of shares of each series; the dividend rate; the dates of payment of
dividends and the dates from which they are cumulative; liquidation price;
redemption price; sinking fund requirements; conversion rights, and rights on
the issuance of shares of any class or series.
TENTH: Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release of the holders
of shares of the corporation entitling them to exercise two-thirds (2/3) or
any other proportion of the voting power of the corporation or of any class or
classes thereof, such action, unless expressly otherwise provided by statute,
may be taken by the vote, consent, waiver or release of the holders of the
shares entitling them to exercise not less than a majority of the voting power
of the corporation or of such class or classes; provided, however, that unless
two-thirds (2/3) of the whole authorized number of directors of the
corporation shall recommend the approval of any of the following matters, the
affirmative vote of the holders of shares entitling them to exercise not less
than eighty percent (80%) of the voting power of the corporation entitled to
vote thereon shall be required to adopt:
(1) a proposed amendment to the articles of the
corporation;
(2) proposed new regulations, or an alteration, amendment
or repeal of the regulations of the corporation;
(3) an agreement of merger or consolidation providing for
the merger or consolidation of the corporation with or
into one or more other corporations;
(4) a proposed combination or majority share acquisition
involving the issuance of shares of the corporation and
requiring shareholder approval;
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<PAGE> 152
(5) a proposal to sell, lease or exchange all or
substantially all of the property and assets of the
corporation;
(6) a proposed dissolution of the corporation; or
(7) a proposal to fix or change the number of directors by
action of the shareholders of the corporation.
The written objection of a director to any such matter
submitted to the president or secretary of the corporation not less than three
days before the meeting of shareholders at which any such matter is to be
considered shall be deemed to be an affirmative vote by such director against
such matter.
ELEVENTH: (A) In addition to any affirmative vote required by
any provision of the Ohio Revised Code or by any other provision hereof, the
affirmative vote or consent of the holders of the greater of (a) four-fifths
(4/5) of the outstanding common shares of the corporation entitled to vote
thereon or (b) that fraction of such outstanding common shares having as the
numerator a number equal to the sum of (i) the number of outstanding common
shares Beneficially Owned by Controlling Persons (as hereinafter defined) plus
(ii) two-thirds (2/3) of the remaining number of outstanding common shares,
and as the denominator a number equal to the total number of outstanding
common shares entitled to vote, shall be required for the adoption or
authorization of a Business Combination (as hereinafter defined) unless:
(1) The Business Combination will result in an involuntary
sale, redemption, cancellation or other termination of ownership of all common
shares of the corporation owned by shareholders who do not vote in favor of,
or consent in writing to, the Business Combination and the cash or fair value
of other readily marketable consideration to be received by such shareholders
for such shares shall at least be equal to the Minimum Price Per Share (as
hereinafter defined); and
(2) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 shall be mailed to the shareholders of the
corporation for the purpose of soliciting shareholder approval of the proposed
Business Combination.
(B) For purposes of this Article ELEVENTH, the following
definitions shall apply:
(1) "Affiliate" shall mean a Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, another Person.
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(2) "Associate" shall mean (i) any corporation or
organization of which a Person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of ten percent (10%) or more of any class of
equity securities (ii) any trust or other estate in which a Person has a ten
percent (10%) or greater individual interest of any nature or as to which a
Person serves as trustee or in a similar fiduciary capacity, (iii) any spouse
of a Person, and (iv) any relative of a Person, or any relative of a spouse of
a Person, who has the same residence as such Person or spouse.
(3) "Beneficial Ownership" shall include without limitation
(i) all shares directly or indirectly owned by a Person, by an Affiliate of
such Person or by an Associate of such Person or such Affiliate, (ii) all
shares which such Person, Affiliate or Associate has the right to acquire
through the exercise of any option, warrant or right (whether or not currently
exercisable), through the conversion of a security, pursuant to the power to
revoke a trust, discretionary account or similar arrangement, or pursuant to
the automatic termination of a trust, discretionary account or similar
arrangement, and (iii) all shares as to which such Person, Affiliate or
Associate directly or indirectly through any contract, arrangement,
understanding, relationship or otherwise (including without limitation any
written or unwritten agreement to act in concert) has or shares voting power
(which includes the power to vote or to direct the voting of such shares) or
investment power (which includes the power to dispose or to direct the
disposition of such shares) or both.
(4) "Business Combination" shall mean (i) any merger or
consolidation of the corporation with or into a Controlling Person or an
Affiliate of a Controlling Person or an Associate of such Controlling Person
or Affiliate, (ii) any sale, lease, exchange, transfer or other disposition,
including without limitation a mortgage or any other security device of all
or any Substantial Part of the assets of the corporation, including without
limitation any voting securities of a Subsidiary, or of the assets of a
Subsidiary, to a Controlling Person or Affiliate of a Controlling Person or
Associate of such Controlling Person or Affiliate, (iii) any merger into the
corporation, or into a Subsidiary, of a Controlling Person or an Affiliate of
a Controlling Person or an Associate of such Controlling Person or Affiliate,
(iv) any sale, lease, exchange, transfer or other disposition to the
corporation or a Subsidiary of all or any part of the assets of a Controlling
Person or Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate but not including any dispositions of assets which, if
included with all other dispositions consummated during the same fiscal year
of the corporation by the same Controlling Person. Affiliates thereof and
Associates of such Controlling Person or Affiliates, would not result in
dispositions during such year by all such Persons of assets having an
aggregate fair value (determined at the time of disposition of the respective
assets) in excess of one percent (1%) of the total consolidated assets of the
corporation (as shown on its certified balance sheet as of the end of the
fiscal year preceding the proposed disposition); provided, however, that in no
event shall any disposition of
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assets be excepted from shareholder approval by reason of the preceding
exclusion if such disposition when included with all other dispositions
consummated during the same and immediately preceding four (4) fiscal years
of the corporation by the same Controlling Person, Affiliate thereof and
Associates of such Controlling Person or Affiliates, would result in
disposition by all such Persons of assets having an aggregate fair value
(determined at the time of disposition of the respective assets) in excess of
two percent (2%) of the total consolidated assets of the corporation (as shown
of its certified balance sheet as of the end of the fiscal year preceding the
proposed disposition), (v) any reclassification of the common shares of the
corporation, or any recapitalization involving common shares of the
corporation, consummated within five (5) years after a Controlling Person
becomes a Controlling Person, and (vi) any agreement, contract or other
arrangement providing for any of the transactions described in the definition
of Business Combination.
(5) "Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
(6) "Controlling Person" shall mean any Person who
Beneficially Owns shares of the corporation entitling that Person to exercise
twenty percent (20%) or more of the voting power of the corporation entitled
to vote in the election of directors.
(7) "Minimum Price Per Share" shall mean the sum of (a) the
higher of (i) the highest gross per share price paid or agreed to be paid to
acquire any common shares of the corporation Beneficially Owned by a
Controlling Person, provided such payment or agreement to make payment was
made within five (5) years immediately prior to the record date set to
determine the shareholders entitled to vote or consent to the Business
Combination in question, or (ii) the highest per share closing public market
price for such common shares during such five (5) year period, plus (b) the
aggregate amount, if any, by which five percent (5%) for each year, beginning
on the date on which such Controlling Person became a Controlling Person, of
such higher per share price exceeds the aggregate amount of all common share
dividends per share paid in cash since the date on which such Person became a
Controlling Person. The calculation of the Minimum Price Per Share shall
require appropriate adjustments for capital changes, including without
limitation stock splits, stock dividends and reverse stock splits.
(8) "Person" shall mean an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, any
unincorporated organization a government or political subdivision thereof, and
any other entity.
(9) "Securities Exchange Act of 1934" shall mean the
Securities Exchange Act of 1934, as amended from time to time as well as any
successor or replacement statute.
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(10) "Subsidiary" shall mean any corporation more than
twenty-five percent (25%) of whose outstanding securities entitled to vote for
the election of directors are Beneficially Owned by the corporation and/or one
or more Subsidiaries.
(11) "Substantial Part" shall mean more than ten percent
(10%) of the total assets of the corporation in question, as shown on its
certified balance sheet as of the end of the most recent fiscal year ending
prior to the time the determination is being made.
(C) During any period in which there are one or more
Controlling Persons, this Article ELEVENTH shall not be altered, changed or
repealed unless the amendment effecting such alteration, change or repeal
shall have received, in addition to any affirmative vote required by any
provision of the Ohio Revised Code or by any other provisions hereof, the
affirmative vote or consent of the holders of the greater of (a) four-fifths
(4/5) of the outstanding common shares of the corporation entitled to vote
thereon or (b) that fraction of such outstanding common shares having as the
numerator a number equal to the sum of (i) the number of outstanding common
shares Beneficially Owned by Controlling Persons plus (ii) two-thirds (2/3) of
the remaining number of outstanding common shares, and as the denominator a
number equal to the total number of outstanding common shares entitled to
vote.
TWELFTH: These Amended Articles take the place of and
supersede the existing Articles of Ohio Casualty Corporation.
THIRTEENTH: Shareholders shall not have the right to vote
cumulatively in the election of directors.
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IN WITNESS WHEREOF, the above named officers, acting for and on
behalf of the corporation, have subscribed their names this 23rd day of May,
1983.
/s/ John G. Sloneker
-----------------------------------
John G. Sloneker, Chairman of the
Board
/s/ William L. Woodall
-----------------------------------
William L. Woodall, Secretary
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Exhibit 4(f)
Code of Regulations of the Registrant
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CODE OF REGULATIONS
OF
OHIO CASUALTY CORPORATION
As amended by an affirmative vote
of a majority of the shareholders on November 20, 1986
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the
shareholders for the election of directors, for the consideration of reports
to be laid before such meeting and for the transaction of such other business
as may properly come before such meeting, shall be held on the third Wednesday
in April of each year, or on such other date as may from time to time be
designated by the Board of Directors.
Section 2. Calling of Meetings. Meetings of the shareholders
may be called only by the Chairman of the Board, by the President, by the
Executive Vice President, by the Secretary, by the Directors by action at a
meeting, by a majority of the Directors acting without a meeting or by the
holders of at least 50% of all shares outstanding and entitled to vote
thereat.
Section 3. Place of Meetings. All meetings of the
shareholders shall be held at the principal office of the corporation, unless
otherwise provided by action of the directors. Meetings of shareholders may
be held at any place within or without of the State of Ohio.
Section 4. Notice of Meetings.
(A) Written notice stating the time, place and purposes of
a meeting of the shareholders shall be given by or at the direction of the
Chairman of the Board, the President, the Executive Vice President or the
Secretary either by personal delivery or by mail not less than seven nor more
than sixty days before the date of the meeting to each shareholder of record
entitled to notice of the meeting. If mailed, such notice shall be addressed
to the shareholder at his address as it appears on the records of the
corporation. Notice of adjournment of a meeting need not be given if the time
and place to which it is adjourned are fixed and announced at such meeting.
In the event of a transfer of shares after the record date for determining the
shareholders who are entitled to receive notice of a meeting of
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shareholders, it shall not be necessary to give notice to the transferee.
Nothing herein contained shall prevent the setting of a record date in the
manner provided by law, the Articles or the Code of Regulations for the
determination of shareholders who are entitled to receive notice of or to
vote at any meeting of shareholders or for any purpose required or permitted
by law.
(B) Following the receipt by the President or the Secretary
of a request in writing, specifying the purpose or purposes for which the
persons properly making such request have called a meeting of the
shareholders, delivered either in person or by registered mail to such officer
by any persons entitled to call a meeting of shareholders, such officer shall
cause to be given to the shareholders entitled thereto notice of a meeting to
be held on a date not less than seven nor more than 105 days after the receipt
of such request, as such officer may fix. If such notice is not given within
45 days after the receipt of such request by the President or the Secretary,
then, and only then, the persons properly calling the meeting may fix the time
of meeting and give notice thereof in accordance with the provisions of the
Code of Regulations.
Section 5. Waiver of Notice. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholder, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice prior to or at the commencement
of the meeting shall be deemed to be a waiver by such shareholder of notice of
such meeting.
Section 6. Quorum. At any meeting of shareholders, the
holders of a majority in amount of the voting shares of the corporation then
outstanding and entitled to vote thereat, present in person or by proxy, shall
constitute a quorum for such meeting. The holders of a majority of the voting
shares represented at a meeting, whether or not a quorum is present, or the
Chairman of the Board, the President, the Secretary, or the officer of the
corporation acting as chairman of the meeting, may adjourn such meeting from
time to time, and at such adjourned meeting any business may be transacted as
if the meeting had been held as originally called.
Section 7. Votes Required. At all elections of directors the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the shareholders for their vote shall be decided by the
vote of such proportion of the shares, or of any class of shares, or of each
class, as is required by law, the Articles or the Code of Regulations.
Section 8. Order of Business. The order of business at any
meeting of the shareholders shall be determined by the officer of the
corporation acting as chairman of such meeting unless otherwise determined by
a vote of the holders of a
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majority of the voting shares of the corporation then outstanding, present in
person or by proxy.
Section 9. Shareholders Entitled to Vote. Each shareholder of
record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation
standing in his name on the books of the corporation on such record date. The
directors may fix a record date for the determination of the shareholders who
are entitled to receive notice of or to vote at a meeting of shareholders,
which record date shall not be a date earlier than the date on which the
record date is fixed and which record date may be a maximum of 120 days
preceding the date of the meeting of shareholders.
Section 10. Proxies. At meetings of the shareholders any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months
after the date of its execution, unless the shareholder executing it shall
have specified therein the length of time it is to continue in force.
Section 11. Inspectors of Election. In advance of any meeting
of shareholders, the directors may appoint inspectors of election to act at
such meeting or any adjournment thereof; if inspectors are not so appointed,
the officer of the corporation acting as chairman of any such meeting may make
such appointment. In case any person appointed as inspector fails to appear
or act, the vacancy may be filled only by appointment made by the directors in
advance of such meeting or, if not so filled, at the meeting by the officer of
the corporation acting as chairman of such meeting. No other person or
persons may appoint or require the appointment of inspectors of election.
ARTICLE II
DIRECTORS
Section 1. Authority and Qualifications. Except where the
law, the Articles or the Code of Regulations otherwise provide, all authority
of the corporation shall be vested in and exercised by a Board of Directors.
Each director of the corporation elected as such for the first time after
April 1, 1983, must be the holder of record of not less than 100 of its issued
and outstanding common shares.
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Section 2. Number of Directors and Terms of Office.
(A) Until changed in accordance with the provisions of the
Code of Regulations, the number of directors of the corporation shall be
twelve (12). The number of directors may be fixed or changed (i) at a meeting
of shareholders called for the purpose of electing directors at which a quorum
is present or (ii) by action of a majority of the whole authorized number of
directors, but no reduction in the number of directors shall of itself have
the effect of shortening the term of any incumbent director.
(B) Until changed in accordance with law, the Board of
Directors shall be divided into three (3) classes consisting of four (4)
directors each (Class I, Class II, and Class III). If the authorized number
of directors is increased or decreased at any time, the directors may, by a
resolution adopted by a majority of the whole authorized number of directors,
determine the number of directors to be added or subtracted, as the case may
be, from any class or classes of directors, and the effect of such increase or
decrease need not be uniform; provided, however, (a) that the authorized
number of directors of any class shall not exceed by more than four (4) the
authorized number of directors of any other class, and (b) no class shall
consist of fewer than three (3) directors. The election of each class of
directors shall be a separate election. The term of office of Class I shall
expire at the annual meeting of shareholders for 1988; the term of office of
Class II shall expire at the annual meeting of shareholders for 1989; the term
of office of Class III shall expire at the annual meeting of shareholders for
1987; and at each annual meeting of shareholders commencing with the year
1987, the successors to the directors of the class whose term shall expire in
that year shall be elected for a term of three years, so that the term of
office of one class of directors shall expire in each year commencing with the
year 1987; provided, however, that each director elected at any time shall
hold office until his successor is duly elected and shall qualify, or until
his earlier death, resignation or removal.
Section 3. Nomination and Election.
(A) Any nominee for election as a director of the
corporation may be proposed only by the Board of Directors or by any
shareholder entitled to vote for the election of directors. No person, other
than a nominee proposed by the Board of Directors, may be nominated for
election as a director of the corporation unless such person shall have been
proposed in a written notice, delivered or mailed by first-class United States
mail, postage prepaid, to the Secretary of the corporation at its principal
office. In the case of a nominee proposed for election as a director at an
annual meeting of shareholders, such written notice of a proposed nominee
shall be received by the Secretary of the corporation on or before the later
of (i) February 1, immediately preceding such annual meeting, or (ii) the
sixtieth (60th) day prior to the first anniversary of the most recent annual
meeting of shareholders of the corporation held for the election of directors;
provided, however, that if the annual
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meeting for the election of directors in any year is not held on or before
the thirty-first (31st) day next following such anniversary, then the written
notice required by this subparagraph (A) shall be received by the Secretary
within a reasonable time prior to the date of such annual meeting. In the
case of a nominee proposed for election as a director at a special meeting of
shareholders at which directors are to be elected, such written notice of a
proposed nominee shall be received by the Secretary of the corporation no
later than the close of business of the seventh day following the day on
which notice of the special meeting was mailed to shareholders. Each such
written notice of a proposed nominee shall set forth (1) the name, age,
business or residence address of each nominee proposed in such notice, (2)
the principal occupation or employment of each such nominee, and (3) the
number of common shares of the corporation owned beneficially and/or of
record by each such nominee and the length of time any such shares have been
so owned.
(B) If a shareholder shall attempt to nominate one or more
persons for election as a director at any meeting at which directors are to be
elected without having identified each such person in a written notice given
as contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.
(C) The election of directors shall be by ballot whenever
requested by the person acting as chairman of the meeting or by the holders of
a majority of the voting shares outstanding, entitled to vote at such meeting
and present in person or by proxy, but unless such request is made, the
election shall be by voice vote.
Section 4. Removal. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than eighty percent
(80%) of the voting power of the corporation to elect directors in place of
those to be removed. In case of any such removal, a new director may be
elected at the same meeting for the unexpired term of each director removed.
Failure to elect a director to fill the unexpired term of any director removed
shall be deemed to create a vacancy in the Board.
Section 5. Vacancies. Vacancies, and newly created
directorships resulting from any increase in the authorized number of
directors, may be filled by a majority of the directors then in office, though
less than a majority of the whole authorized number of directors, or in any
other manner provided by law, the Articles or the Code of Regulations.
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Section 6. Meetings.
(A) A meeting of the directors shall be held immediately
following the adjournment of each annual meeting of shareholders at which
directors are elected, and notice of such meeting need not be given.
(B) Regular meetings of the directors shall be held four
times in each year, on the third Thursday in the months of February, May,
August, and November, if not a legal holiday, but if a legal holiday, then on
the next business day, and at such other times as may be fixed by resolution
of the Board of Directors. No notice of such regular meetings shall be
required.
(C) The directors shall hold such other meetings as may
from time to time be called, and such other meetings of directors may be
called only by the Chairman of the Board, the President, the Executive Vice
President, the Secretary, or any four directors.
(D) All meetings of directors shall be held at the
principal office of the corporation in Hamilton, Ohio, or at such other place
within or without the State of Ohio as the directors may from time to time
determine by a resolution.
Section 7. Notice of Meetings. Notice of the time and place
of each meeting of directors for which the requirement of notice has not been
dispensed with by the Articles, Code of Regulations or the Bylaws shall be
given to each of the directors by at least one of the following methods:
(A) In a writing mailed not less than three days before
such meeting and addressed to the residence or usual place of business of a
director, as such address appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, or a writing sent
or delivered to the residence or usual place of business of a director as the
same appears on the records of the corporation, not later than the day before
the date on which such meeting is to be held; or
(C) Personally or by telephone not later than the day
before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified
in the Code of Regulations shall be sufficient, and the method of giving
notice to all directors need not be uniform. Notice of any meeting of
directors may be given only by the Chairman of the Board, the President, the
Executive Vice President or the Secretary of the corporation. Any such notice
need not specify the purpose or purposes of the meeting. Notice of
adjournment of a meeting of directors need not
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be given if the time and place to which it is adjourned are fixed and
announced at such meeting.
Section 8. Waiver of Notice. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon
the records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
Section 9. Quorum. A majority of the whole authorized number
of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute
a quorum for filling a vacancy in the Board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
Board, except as otherwise provided by law, the Articles or the Code of
Regulations.
Section 10. Executive Committee. The directors may create an
Executive Committee or any other committee of directors, to consist of not
less than three directors, and may authorize the delegation to such Executive
Committee or other committees of any of the authority of the directors,
however, conferred, other than that of filling vacancies among the directors
or in the Executive Committee or in any other committee of the directors.
Such Executive Committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such Executive Committee or other committee of
directors may act by a majority of its members at a meeting or by a writing or
writings signed by all of its members.
Any act or authorization of an act by the Executive Committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the Executive Committee or of any other committee of
directors shall be required.
Section 11. Compensation. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as
directors, such amounts as the directors may determine.
Section 12. Bylaws. The directors may adopt, and amend from
time to time, Bylaws for their own government, which Bylaws shall not be
inconsistent with the law, the Articles or the Code of Regulations.
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ARTICLE III
OFFICERS
Section 1. Officers, Term and Compensation. The officers of
the corporation to be elected by the directors shall be a Chairman of the
Board, who shall be a director, a Chief Executive Officer, a President, an
Executive Vice President, one or more Vice Presidents, as the directors may
from time to time determine, a Secretary, a Treasurer, and such other officers
as the directors may from time to time elect. Officers need not be
shareholders of the corporation, and may be paid such compensation as the
Board of Directors may determine. Any two or more offices may be held by the
same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is required by law,
the Articles, the Code of Regulations or the Bylaws to be executed,
acknowledged or verified by two or more officers.
Section 2. Tenure of Office. The officers of the corporation
shall hold office at the pleasure of the directors. Any officer of the
corporation may be removed, either with or without cause, at any time, by the
affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to the contract rights of the
persons so removed, if any.
Section 3. Duties of the Chairman of the Board. The Chairman
of the Board shall preside at all meetings of the directors and at all
meetings of the shareholders. He shall have such other powers and duties as
the directors shall from time to time assign to him.
Section 4. Duties of the Chief Executive Officer. The Chief
Executive Officer shall be the active executive officer of the corporation and
shall exercise supervision over the other officers, subject, however, to the
control of the Board of Directors. The Chief Executive Officer shall be
entitled to exercise the powers of the President, however conferred. The
Chief Executive Officer shall have such other powers and duties as the
directors shall from time to time assign to him.
Section 5. Duties of the President. The President shall be
the chief administrative officer of the corporation and shall exercise
supervision over the business of the corporation and shall have, among such
additional powers and duties as the directors may from time to time assign to
him, the power and authority to sign all certificates evidencing shares of the
corporation and all deeds, mortgages, bonds, contracts, notes and other
instruments requiring the signature of the President of the corporation. In
the absence of the Chairman of the Board, it shall be the duty of the
President to preside at all meetings of shareholders.
Section 6. Duties of the Executive Vice President. The
Executive Vice President shall perform such duties as may from time to time be
assigned to him by
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the directors. At the request of the Chief Executive Officer or the President,
or in the absence of the Chief Executive Officer and the President, the
Executive Vice President may perform all the duties of the President, and when
so acting, shall have all the powers of the President.
Section 7. Duties of the Vice Presidents. The Vice Presidents
shall perform such duties as may from time to time be assigned to them by the
directors, the Chief Executive Officer or the President. At the request of
the President, or in the absence of the President, the Chief Executive Officer
and the Executive Vice President, a Vice President may perform all the duties
of the President, and when so acting, shall have all the powers of the
President.
Section 8. Duties of the Secretary. It shall be the duty of
the Secretary, or of an Assistant Secretary, if any, in case of the absence or
inability to act of the Secretary, to keep minutes of all the proceedings of
the shareholders and the directors and to make a proper record of the same,
which shall be attested by him; to sign all certificates for shares, and all
deeds, mortgages, bonds, contracts, notes and other instruments requiring his
signature on behalf of the corporation, to perform such other duties as may be
required by law, the Articles or the Code of Regulations; to keep such books
as may be required by the directors; to file all reports to states and to the
federal government; to perform such other and further duties as may from time
to time be assigned to him by the directors, the Chief Executive Officer or
the President; and to deliver all books, paper and property of the corporation
in his possession to his successor, to the Chief Executive Officer, or to the
President.
Section 9. Duties of the Treasurer. The Treasurer or an
Assistant Treasurer, if any, in case of the absence or inability to act of the
Treasurer, shall receive and safely keep in charge all money, bills, notes,
choses in action, securities, deeds, leases, mortgages and similar property
belonging to the corporation, and shall do with or disburse the same as
directed by the Chief Executive Officer, the President or the directors; shall
keep an accurate account of the finances and business of the corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, stated capital and shares, together with such other accounts as may be
required, and hold the same open for inspection and examination by the
directors; shall give bond in such sum with such security as the directors may
require for the faithful performance of his duties; shall, upon the expiration
of his term of office, deliver all money and other property of the corporation
in his possession or custody to his successor, the Chief Executive Officer, or
the President; and shall perform such other duties as from time to time may be
assigned to him by the directors.
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ARTICLE IV
SHARES
Section 1. Certificates. Certificates evidencing ownership of
shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the corporation shall bear a distinguishing
number, the signatures of the Chairman of the Board, the President, or a Vice
President, and of the Secretary or an Assistant Secretary (except that when
any such certificate is countersigned by an incorporated transfer agent or
registrar, such signatures may be facsimile, engraved, stamped or printed),
and such recitals as may be required or permitted by law. Certificates
evidencing shares of the corporation shall be of such tenor and design as the
directors may from time to time adopt.
Section 2. Transfers. Where a certificate evidencing a share
or shares of the corporation is presented to the corporation or its proper
agents with a request to register transfer, the transfer shall be registered
as requested if:
1. An appropriate person signs on each certificate so
presented or signs on a separate document an assignment
or transfer of shares evidenced by each such
certificate, or signs a power to assign or transfer
such shares, or when the signature of an appropriate
person is written without more on the back of each such
certificate; and
2. Reasonable assurance is given that the endorsement of
each appropriate person is genuine and effective; the
corporation or its agents may refuse to register a
transfer of shares unless the signature of each
appropriate person is guaranteed by a commercial bank
or trust company having an office or a correspondent in
the City of New York or by a firm having membership in
the New York Stock Exchange; and
3. All applicable laws relating to the collection of
transfer or other taxes have been complied with; and
4. The corporation or its agents are not otherwise
required or permitted to refuse to register such
transfer.
Section 3. Transfer Agents and Registrars. The directors may
appoint one or more agents to transfer or to register shares of the
corporation, or both.
Section 4. Lost, Wrongfully Taken or Destroyed Certificates.
Except as otherwise provided by law, where the owner of a certificate
evidencing shares of the corporation claims that such certificate has been
lost, destroyed or wrongfully
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taken, the directors must cause the corporation to issue a new certificate in
place of the original certificate if the owner:
1. So requests before the corporation has notice that such
original certificate has been acquired by a bona fide
purchaser; and
2. Files with the corporation any indemnity bond, with
surety or sureties satisfactory to the corporation, in
such sum as the directors may, in their discretion,
deem reasonably sufficient as indemnity against any
loss or liability that the corporation may incur by
reason of the issuance of each such new certificate;
and
3. Satisfies any other reasonable requirements which may
be imposed by the directors, in their discretion.
ARTICLE V
INDEMNIFICATION AND INSURANCE
Section 1. Mandatory Indemnification. The corporation shall
indemnify (A) any officer or director of the corporation and (B) any person
(including an officer or director of the corporation) who has served or is
serving at the request of the corporation as a director, trustee or officer of
another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust or other enterprise who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the corporation) by reason of the fact that
he is or was a director, trustee, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee or agent of another corporation (domestic
or foreign, nonprofit or for profit), partnership, joint venture, trust, or
other enterprise, against expenses (including, without limitation, attorneys'
fees, filing fees, court reporters' fees and transcript costs), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 1 shall be presumed in
respect of any act or omission giving rise to such claim for indemnification,
to have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit, or proceeding by judgment,
order, settlement, or conviction, or
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upon a plea of nolo contendere or its equivalent, shall not, of itself, rebut
such presumption.
Section 2. Court-Approved Indemnification. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify (i) any officer or
director of the corporation, or (ii) any person (including an officer or
director of the corporation) who has served or is serving at the request of
the corporation as a director, trustee or officer of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, in respect of any claim, issue or matter
asserted in such action or suit as to which he shall have been adjudged to be
liable for gross negligence or misconduct (other than negligence) in the
performance of his duty to the corporation unless and only to the extent that
the Court of Common Pleas of Butler County, Ohio or the court in which such
action or suit was brought shall determine upon application that despite such
adjudication of liability, and in view of all the circumstances of the case,
he is fairly and reasonably entitled to such indemnity as such Court of Common
Pleas or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by
this Section 2.
Section 3. Indemnification for Expenses. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation or any person (including an
officer or director of the corporation) who has served or is serving at the
request of the corporation as a director, trustee or officer of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
1, or in defense of any claim, issue, or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs) actually and reasonably incurred by him in connection therewith.
Section 4. Determination Required. Any indemnification
required under Section 1 and not precluded under Section 2 shall be made by
the corporation only upon a determination that such indemnification is proper
in the circumstances because the person has met the applicable standard of
conduct set forth in Section
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1. Such determination may be made only (A) by a majority vote of a quorum
consisting of directors of the corporation who were not and are not parties
to, or threatened with, any such action, suit or proceeding or (B) if such a
quorum is not obtainable or if a majority of a quorum of disinterested
directors so directs, in a written opinion by independent legal counsel other
than an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the corporation, or any
person to be indemnified, within the past five years or (C) by the
shareholders or (D) by the Court of Common Pleas of Butler County, Ohio or
(if the corporation is a party thereto) the court in which such action, suit
or proceeding was brought, if any; any such determination may be made by a
court under subparagraph (D) of this Section at any time (including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have
been denied or disregarded by the disinterested directors under subparagraph
(A) or by independent legal counsel under subparagraph (B) or by the
shareholders under subparagraph (C) of this Section); and no failure for any
reason to make any such determination, and no decision for any reason to deny
any such determination, by the disinterested directors under subparagraph (A)
or by independent legal counsel under subparagraph (B) or by shareholders
under subparagraph (C) of this Section shall be evidence in rebuttal of the
presumption recited in Section 1. Any determination made by the disinterested
directors under subparagraph (A) of this Section or by independent legal
counsel under subparagraph (B) of this Section to make indemnification in
respect of any claim, issue or matter asserted in an action or suit threatened
or brought by or in the right of the corporation shall be promptly
communicated to the person who threatened or brought such action or suit, and
within ten (10) days after receipt of such notification such person shall have
the right to petition the Court of Common Pleas of Butler County, Ohio or the
court in which such action or suit was brought, if any, to review the
reasonableness of such determination.
Section 5. Advances for Expenses. Expenses (including,
without limitation, attorneys fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding
referred to in Section 1 shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding to or on behalf of the
officer, Director or other person entitled to indemnity under Section 1
promptly as such expenses are incurred by him, but only if such officer,
Director or other person shall first agree, in writing, to repay all amounts
so paid in respect of any claim, issue or other matter asserted in such
action, suit or proceeding in defense of which he shall not have been
successful on the merits or otherwise:
(A) unless it shall ultimately be determined as provided in
Section 4 that he is not entitled to be indemnified by the corporation as
provided under Section 1; or
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(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or suit, he
shall have been adjudged to be liable for gross negligence or misconduct
(other than negligence) in the performance of his duty to the corporation,
unless and only to the extent that the Court of Common Pleas of Butler County,
Ohio or the court in which such action or suit was brought shall determine
upon application that, despite such adjudication of liability, and in view of
all the circumstances, he is fairly and reasonably entitled to all or part of
such indemnification.
Section 6. Article V Not Exclusive. The indemnification
provided by this Article V shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the Articles
or the Regulations or any agreement, vote of shareholders of the corporation
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be an officer or director of
the corporation and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 7. Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, trustee,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, or agent
of another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust, or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the
obligation or the power to indemnify him against such liability under the
provisions of this Article V.
Section 8. Certain Definitions. For purposes of this Article
V, and as examples and not by way of limitation:
(A) A person claiming indemnification under this Article V
shall be deemed to have been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Section 1, or in defense of
any claim, issue or other matter therein, if such action, suit or proceeding
shall be terminated as to such person, with or without prejudice, without the
entry of a judgment or order against him, without a conviction of him, without
the imposition of a fine upon him, and without his payment or agreement to pay
any amount in settlement thereof (whether or not any such termination is based
upon a judicial or other determination of lack of merit of the claims made
against him or otherwise results in a vindication of him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references
to "serving at the
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request of the corporation" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interest
of the corporation" within the meaning of that term as used in this Article V.
Section 9. Venue. Any action, suit or proceeding to determine
a claim for indemnification under this Article V may be maintained by the
person claiming such indemnification, or by the corporation, in the Court of
Common Pleas of Butler County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Butler County, Ohio in any
such action, suit or proceeding.
ARTICLE VI
SEAL
The seal of the corporation shall be circular, about two inches
in diameter, with the name of the corporation engraved around the margin and
the word "SEAL" engraved across the center.
ARTICLE VII
FISCAL YEAR
The fiscal year shall begin on the first day of January and end
on the 31st day of December in each year, or on such other dates as may from
time to time be established by the directors.
ARTICLE VIII
AMENDMENTS
The Code of Regulations may be amended, or new regulations may
be adopted, at a meeting of shareholders held for such purpose, or without a
meeting by the written consent of the holders of shares entitling them to
exercise not less than all (100%) of the voting power of the corporation on
such proposal.
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