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EXHIBIT A
[ ], 1996
Salomon Brothers Inc
As Representative of the
several Underwriters
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement") between SCPIE
Holdings Inc., a Delaware corporation (the "Company") and you as representative
of a group of Underwriters named therein, relating to an underwritten public
offering of Common Stock, $.0001 par value (the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into
the Underwriting Agreement, the undersigned agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
an offering of, any shares of Common Stock beneficially owned by the undersigned
or any securities convertible into, or exchangeable for, shares of Common Stock
for a period of 180 days following the day on which the Underwriting Agreement
is executed without your prior written consent, other than shares of Common
Stock disposed of as bona fide gifts.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Very truly yours,
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SCPIE HOLDINGS INC.
2,000,000 Shares1
Common Stock
($.0001 par value)
Underwriting Agreement
[ ], 1996
Salomon Brothers Inc
As Representative of the
several Underwriters
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
SCPIE Holdings Inc., a Delaware corporation (the "Company"),
proposes to issue shares of its common stock, par value $.0001 per share (the
"Common Stock"), in connection with the reorganization (the "Reorganization")
of Southern California Physicians Insurance Exchange, a California reciprocal
insurance exchange ("SCPIE"), into a California stock insurance company. As
part of the Reorganization, SCPIE will be merged (the "Merger") with and into
SCPIE Indemnity Company, a California stock insurance company and wholly owned
subsidiary of the Company that will be the surviving corporation of the Merger
("SCPIE Indemnity"), pursuant to a Plan and Agreement of Merger, dated as of
March 21, 1996 as amended by the Amended and Restated Plan and Agreement of
Merger, dated August 8, 1996 (as so amended, the "Plan"), by and among the
Company, SCPIE Indemnity and SCPIE. Under the Plan, the Company proposes to
issue to Eligible Members (as defined in the Plan) shares of Common Stock (the
"Merger Shares") and cash in lieu of fractional shares in exchange for their
Membership Interests (as defined in the Plan). In addition, as part of the
Reorganization, the Company proposes to issue and sell to the underwriters
named in Schedule I hereto (the "Underwriters"), for whom Salomon Brothers Inc
is acting as representative (the "Representative"), 2,000,000 shares of Common
Stock (the "Underwritten Securities"). The Company also proposes to grant to
the Underwriters an option to purchase from the Company up to 300,000
additional shares of Common Stock to cover over-allotments (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities"). Upon the
____________________
1 Plus an option to purchase from the Company up to 300,000 additional
shares to cover over-allotments.
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effectiveness of the Merger, the Eligible Members' Membership Interests will be
extinguished.
1. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to, and agrees with, each Underwriter as set forth
below in this Section 1.
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 333-4450) on Form S-1, including a related preliminary
prospectus, for the registration under the Securities Act of 1933, as
amended (the "Act") of the offering and sale of the Securities. The
Company has filed one or more amendments thereto, including the
related preliminary prospectus, each of which has previously been
furnished to you. The Company will next file with the Commission
either (i) prior to effectiveness of such registration statement, a
further amendment to such registration statement (including the form
of final prospectus) or (ii) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and
424(b)(1) or (4). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the Prospectus with
respect to the Securities and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such
required information, with respect to the Securities and the offering
thereof and, except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein.
The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean each
date that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the parties
hereto. "Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph (a) above and any preliminary prospectus included in
the Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing
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pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date. "Registration Statement" shall mean the registration statement
referred to in paragraph (a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 424" and "Rule 430A" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
(b) On the Effective Date, the Registration Statement did
or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act and the rules thereunder;
on the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company does not make
any representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representative specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus.
Prior to the Effective Time (as defined in the Plan), American
Healthcare Insurance Company, a Delaware corporation ("AHIC"), FG
Casualty Company, an Arkansas corporation ("FGCC") and SCPIE
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Indemnity are the only subsidiaries of the Company. Immediately after
the Effective Time, SCPIE Indemnity, AHIC, FGCC, SCPIE Management
Company, a California corporation ("SCPIE Management"), SCPIE
Insurance Services, Inc., a California corporation ("Insurance
Services"), and SCPIE Management Services, Inc., a California
corporation ("Management Services"), will be the only direct and
indirect subsidiaries of the Company. (SCPIE Indemnity, AHIC, FGCC,
SCPIE Management, Insurance Services and Management Services are
hereinafter sometimes referred to individually as a "Post-Effective
Subsidiary" and collectively as the "Post-Effective Subsidiaries";
SCPIE (until immediately prior to the Effective Time), SCPIE
Indemnity, AHIC and FGCC are hereinafter sometimes referred to
individually as an "Insurance Subsidiary" and collectively as the
"Insurance Subsidiaries"). SCPIE has been and, until immediately
prior to the Effective Time, will be a reciprocal insurance exchange
duly organized under the laws of the State of California and has been
and will be in compliance in all material respects with the
requirements of the insurance laws of the State of California
providing for the organization and regulation of reciprocal insurance
exchanges; and, through its attorney-in-fact SCPIE Management, has
full power and authority to own its properties and conduct its
business as described in the Prospectus. Each of the Post-Effective
Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and
authority to own its properties and conduct its business as described
in the Prospectus. Each of the Company, SCPIE and each Post-Effective
Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which
requires such qualification or wherein it owns or leases material
properties or conducts material business.
(d) All the outstanding shares of capital stock of each
Post-Effective Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, immediately after
the Effective Time, all outstanding shares of capital stock of the
Post-Effective Subsidiaries will be owned by the Company, either
directly or through Post-Effective Subsidiaries, free and clear of any
security interest, claims, liens or encumbrances.
(e) The Company's authorized capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to
the description thereof contained in the Prospectus; the outstanding
shares of Common Stock have been duly and validly authorized and
issued and are fully paid and nonassessable; the Securities have been
duly and validly authorized, and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be
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fully paid and nonassessable; the Merger Shares have been duly and
validly authorized, and, when issued and delivered to Eligible Members
in exchange for their Membership Interests as provided in the Plan,
will be fully paid and nonassessable; the Securities and the Merger
Shares have been duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange; the certificates
for the Securities and the Merger Shares conform to the requirements
of the Delaware General Corporation Law and the New York Stock
Exchange; and neither the holders of outstanding shares of capital
stock of the Company, the Eligible Members nor the other policyholders
of SCPIE are entitled to preemptive or other rights to subscribe for
the Securities.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
(g) No consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws or insurance securities laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters; and no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated by the Plan, except such as have been
obtained and are in full force and effect under the Act, the insurance
laws of the State of California (the "California Insurance Law"), the
General Corporation Law of the State of California (the "California
Corporations Law") and the blue sky laws and insurance securities laws
of various jurisdictions in connection with the issuance of the Merger
Shares to the Eligible Members.
(h) Neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under, any law or the
bylaws or any other organizational document of SCPIE or the charter,
by-laws or other organizational document of the Company, or any of the
Post-Effective Subsidiaries or the terms of any material indenture or
other material agreement or material instrument to which the Company,
SCPIE or any of the Post-Effective Subsidiaries is a party or any
material judgment, order or decree that is applicable to the Company,
SCPIE or any of the Post-Effective Subsidiaries of any court,
regulatory body, administrative agency, governmental body or
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arbitrator having jurisdiction over the Company, SCPIE or any of the
Post-Effective Subsidiaries.
(i) No holders of securities of the Company have rights
to the registration of such securities under the Registration
Statement.
(j) Except as set forth in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any Post- Effective
Subsidiary or any security convertible into or exchangeable for any
shares of capital stock of the Company or any Post- Effective
Subsidiary.
(k) The Company has delivered to you a true, complete and
correct copy of the Plan, with all amendments thereof; the
representations and warranties of the Company, SCPIE Indemnity and
SCPIE contained in Article IV and Article V of the Plan are, and at
the Effective Time and the Closing Date will be, true and correct; the
Plan conforms in all material respects to the requirements of the
California Insurance Law applicable to the merger of reciprocal
insurance exchanges into stock insurance companies; by letter, dated
September 16, 1996, the Commissioner of Insurance of the State of
California (the "Commissioner") approved the Merger for submission to
a vote of the Eligible Members; on November 5, 1996 (the "Special
Meeting Date"), the Plan was duly approved by the affirmative vote of
at least two-thirds of the Eligible Members and such approval has not
been rescinded or otherwise withdrawn; on [ ], 1996, the
Commissioner issued a final order approving the Plan in accordance
with the requirements of the California Insurance Law (the
"Commissioner's Order"); no other approvals are required to be
obtained under the California Insurance Law for the consummation of
the transactions contemplated by the Plan; prior to or
contemporaneously with the Closing Date, each of the actions required
to occur and conditions required to be satisfied at or prior to the
Effective Time pursuant to the Commissioner's Order or the Plan will
have occurred or been satisfied; and at the Effective Time, the
Reorganization and the Merger will be completed in accordance with the
Plan, the Commissioner's Order and the California Insurance Law, and
all the rights and properties of SCPIE shall accrue to, and become the
rights and properties of, SCPIE Indemnity, and all the rights of
creditors and liens of SCPIE shall become the rights of creditors and
liens of SCPIE Indemnity.
(l) The Company has filed with the Commission a
registration statement (file number 333-4454) on Form S-4 (such
registration statement, including exhibits and financial statements,
in the form in which it became effective being hereinafter referred to
as the "Merger
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Registration Statement"), including a related proxy
statement/prospectus (the final form of such proxy
statement/prospectus included in the Merger Registration Statement
being hereinafter referred to as the "Proxy Statement/Prospectus"),
for the registration under the Act of the exchange of the Membership
Interests for the Merger Shares and cash in lieu of fractional shares.
The Merger Registration Statement has become effective and no stop
order suspending the effectiveness of the Merger Registration
Statement has been issued and no proceedings for that purpose have
been instituted or to the knowledge of the Company threatened. The
Company has included in the Merger Registration Statement all
information required by the Act and the rules thereunder to be
included in the Proxy Statement/Prospectus with respect to the Merger
Shares and the offering thereof. On the effective date of the Merger
Registration Statement and on the Special Meeting Date, the Merger
Registration Statement and the Proxy Statement/ Prospectus complied in
all material respects with the applicable requirements of the Act and
the rules thereunder. On the effective date of the Merger
Registration Statement, the Merger Registration Statement did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. On the Special Meeting
Date, the Proxy Statement/Prospectus did not include any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(m) Each of the Company, SCPIE (either directly or
through its attorney-in-fact SCPIE Management) and the Post-Effective
Subsidiaries owns, possesses or has obtained all material governmental
licenses, permits, certificates, consents, orders, approvals and other
authorizations necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as currently
conducted, and neither the Company, SCPIE nor any of the
Post-Effective Subsidiaries has received any notice of proceedings
relating to revocation or modification of any such licenses, permits,
certificates, consents, orders, approvals or authorizations which
revocation or modification would result in a material adverse effect
upon the condition, financial or otherwise, earnings, business,
prospects or results of operations of the Company, SCPIE and
Post-Effective Subsidiaries, taken as a whole.
(n) Each of the Insurance Subsidiaries is duly licensed
or authorized to conduct its insurance business under the insurance
laws of each jurisdiction in which it conducts such business so as to
require such licensing or authorization; all such licenses or
authorizations are in full force and effect and neither the Company
nor any
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Insurance Subsidiary has received any notice of any event, inquiry,
investigation or proceeding that would reasonably be expected to
result in the suspension, revocation or limitation of any such
licenses or authorizations or otherwise impose any limitation on the
conduct of the business of the Company or any Insurance Subsidiary
which suspension, revocation or limitation would result in a material
adverse effect upon the condition, financial or otherwise, earnings,
business, prospects or results of operations of the Company, SCPIE and
Post-Effective Subsidiaries, taken as a whole, and there is no
sustainable basis for any such suspension, revocation or limitation;
each of the Insurance Subsidiaries is in compliance with, and conducts
its businesses in conformity with, all applicable insurance laws and
regulations, except where the failure to so comply or conform would
not have a material adverse effect on the condition, financial or
otherwise, earnings, business, prospects or results of operations of
the Company, SCPIE and the Post-Effective Subsidiaries, taken as a
whole; and the Company has disclosed in writing to you all pending
significant examinations, and all significant examinations that have
been completed since December 31, 1990 by any governmental authority
having jurisdiction to regulate the insurance operations of any
Insurance Subsidiary.
(o) All reinsurance treaties and arrangements to which
any of the Insurance Subsidiaries is a party are in full force and
effect and none of the Insurance Subsidiaries is in violation of or in
default in the performance, observance or fulfillment of, any material
obligation, agreement, covenant or condition contained therein; upon
the effectiveness of the Merger, all such treaties and arrangements to
which SCPIE is a party shall remain in full force and effect and inure
to the benefit of, and be enforceable by, SCPIE Indemnity; neither the
Company nor any of the Insurance Subsidiaries has received notice from
any of the other parties to such treaties, contracts or agreements
that such other party intends not to perform such treaty and, to the
best knowledge of the Company and the Insurance Subsidiaries, the
Company and the Insurance Subsidiaries have no reason to believe that
any of the other parties to such treaties or arrangements will be
unable to perform any such treaties or arrangements except to the
extent adequately and properly reserved for in the combined financial
statements of SCPIE and Organization of Southern California
Physicians, Inc., a California corporation ("OSCAP"), included in the
Prospectus.
(p) Except as disclosed in the Prospectus, no change in
any insurance laws, rules or regulations in California has been
introduced that would reasonably be expected to be adopted and if
adopted, would reasonably be expected to have, individually or in the
aggregate with all such
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changes, a material adverse effect upon the condition, financial or
otherwise, earnings, business, prospects or results of operations of
the Company and the Post-Effective Subsidiaries, taken as a whole.
(q) Ernst & Young LLP, who have certified the combined
financial statements of SCPIE and OSCAP and the balance sheets of the
Company included in the Registration Statement and the Prospectus, are
independent public accountants required by the Act and the rules and
regulations thereunder.
(r) The balance sheet of the Company, including the note
thereto, included in the Registration Statement and Prospectus
complies as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder and presents fairly
the financial position of the Company as at the dates indicated; the
combined financial statements of SCPIE and OSCAP, including the
schedules and notes thereto, included in the Registration Statement
and Prospectus comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder and
present fairly the combined financial position of SCPIE and OSCAP as
at the dates indicated and the combined results of operations and the
combined cash flows of SCPIE and OSCAP for the periods specified.
Such balance sheets and financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may
otherwise be indicated therein or in the notes thereto. The financial
statement schedules, if any, included in the Registration Statement
and the Prospectus present fairly the information required to be
stated therein. The selected financial data included in the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited combined
financial statements included in the Registration Statement.
(s) The statutory financial statements of SCPIE, from
which certain ratios and other statistical data filed as part of the
Registration Statement or included or incorporated in the Prospectus
have been derived: (i) have for each relevant period been prepared in
conformity with statutory accounting practices required or permitted
by the National Association of Insurance Commissioners and by the
California Department of Insurance, and such statutory accounting
practices have been applied on a consistent basis throughout the
periods involved, except as may otherwise be indicated therein or in
the notes thereto; and (ii) present fairly the statutory financial
position of SCPIE as at the dates thereof, and the statutory basis
results of operations of SCPIE for the periods covered thereby.
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(t) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein: (i) there has been no material adverse
change in the condition, financial or otherwise, earnings, business,
prospects, properties or results of operations of the Company, SCPIE
and the Post-Effective Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business; (ii)
there have been no material transactions entered into by the Company,
SCPIE or any of the Post-Effective Subsidiaries other than those in
the ordinary course of business; (iii) neither the Company, SCPIE nor
any of the Post-Effective Subsidiaries has incurred any liability or
obligation, direct or contingent, that is material to the Company,
SCPIE and the Post-Effective Subsidiaries, taken as a whole, and there
has not been any change in the capital stock of the Company or any
payment of or declaration to pay any dividends or any other
distributions with respect to the Company's capital stock, except as
set forth in the Prospectus; and (iv) there has not been any material
change in the combined policyholders' equity, statutory surplus or
reserves (including any such change in the loss adjustment and loss
expense reserves or its reserving practices) of SCPIE and OSCAP since
December 31, 1995.
(u) Each of the Company, SCPIE and OSCAP maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. On
and after the Effective Time, each of the Company and each of the
Post-Effective Subsidiaries will continue to maintain such a system.
(v) The Company, SCPIE (either directly or through SCPIE
Management) and the Post-Effective Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
do not materially affect the value of such property and do not
materially interfere with the use made by the Company, SCPIE and the
Post-Effective Subsidiaries and proposed to be made of such property
by the Company and the Post-Effective Subsidiaries; all real property
and buildings held under lease by the Company, SCPIE and the
Post-Effective Subsidiaries are held
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by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
and the Post-Effective Subsidiaries; and at the Effective Time, all of
SCPIE's rights in respect of such properties and leases shall inure to
the benefit of, and be enforceable by, SCPIE Indemnity.
(w) Except as disclosed in the Prospectus, the Company,
SCPIE (either directly or through SCPIE Management), OSCAP and the
Post-Effective Subsidiaries have filed all federal, state and local
income and franchise tax returns required to be filed through the date
hereof and have paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company, SCPIE, OSCAP or any of the
Post-Effective Subsidiaries.
(x) There is no pending or, to the best knowledge of the
Company, SCPIE and the Post-Effective Subsidiaries, threatened action,
suit or proceeding before any court or governmental agency, authority
or body or any arbitrator involving the Company, SCPIE or any of the
Post-Effective Subsidiaries of a character required to be disclosed in
the Registration Statement which is not adequately disclosed in the
Prospectus or challenging the Reorganization, the Merger or the Plan
or the consummation of the transactions contemplated thereby or the
offering of the Securities by the Underwriters; and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit, which is not described or filed as required.
(y) Neither the Company, SCPIE nor any of the
Post-Effective Subsidiaries (i) is in violation of its charter,
by-laws or other organizational documents, (ii) is in default in any
material respect, and no event has occurred that, with notice or lapse
of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject, or (iii)
is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business.
(z) Neither the Company, SCPIE nor any of the
Post-Effective Subsidiaries has taken or will take, directly or
indirectly, any action designed to, or that might reasonably
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be expected to, cause or result in the stabilization or manipulation
of the price of the Common Stock.
(aa) Neither the Company nor any of the Post-Effective
Subsidiaries is and, after giving effect to the offering and sale of
the Securities, neither the Company nor any of the Post-Effective
Subsidiaries will be, an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940 (the "Investment Company Act").
(bb) Each of the Company, SCPIE (either directly or
through its attorney-in-fact SCPIE Management) and the Post-Effective
Subsidiaries owns or has valid and adequate rights to use all patents,
trademarks, trademark registration, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights owned by it or necessary for the conduct of its
business, free and clear of any pledges, security interests, claims,
charges, liens or encumbrances and restrictions that may materially
interfere with the conduct of its business; neither the Company,
SCPIE, nor any of the Post-Effective Subsidiaries is aware of any
claim to the contrary or any challenge by any other person to the
rights of the Company, SCPIE or the Post-Effective Subsidiaries with
respect to the foregoing; and at the Effective Time, all of SCPIE's
rights in respect of the foregoing shall inure to the benefit of, and
be enforceable by, SCPIE Indemnity.
(cc) All liability, property and casualty, workers'
compensation, directors and officers liability, surety and other
similar insurance contracts that insure the business, properties,
operations or affairs of the Company, SCPIE and the Post-Effective
Subsidiaries or relate to or affect the ownership, use or operations
of the Company's, SCPIE's or the Post-Effective Subsidiaries' assets
or properties are in full force and effect and, to the best knowledge
of the Company, SCPIE and the Post-Effective Subsidiaries, are with
financially sound and reputable insurers and provide coverage that is
reasonable and customary for persons in similar businesses or for
similar property. At the Effective Time, all of SCPIE's rights in
respect of such contracts (excluding the directors and officers
liability contract in existence [prior to the Effective Time]) shall
inure to the benefit of, and be enforceable by, SCPIE Indemnity. At
the Effective Time the Company shall have obtained a directors and
officers liability contract in full force and effect with a
financially sound and reputable insurer with coverage that is
reasonable and customary for persons in similar businesses.
2. PURCHASE AND SALE. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each
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Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $[ ] per share, the
amount of the Underwritten Securities set forth opposite such Underwriter's
name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company hereby
grants an option to the Underwriters to purchase, severally and not jointly, up
to 300,000 shares of the Option Securities at the same purchase price per share
as the Underwriters shall pay for the Underwritten Securities. Said option may
be exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the Prospectus upon written or telegraphic notice by the Representative
to the Company setting forth the number of shares of the Option Securities as
to which the several Underwriters are exercising the option and the settlement
date. Delivery of certificates for the shares of Option Securities by the
Company, and payment therefor to the Company, shall be made as provided in
Section 3 hereof. The number of shares of the Option Securities to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Securities to be purchased by the several Underwriters
as such Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for
the Underwritten Securities and the Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at the office of LeBoeuf,
Lamb, Xxxxxx & XxxXxx, L.L.P., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at
10:00 AM, New York City time, on [ ], 1996, or such later date (not later than
[ ], 1996) as the Representative shall designate, which date and time
may be postponed by agreement between the Representative and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for
the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representative for the respective accounts of
the several Underwriters against payment by the several Underwriters through
the Representative of the aggregate purchase price of the Securities being sold
to or upon the order of the Company by certified or official bank check or
checks drawn on or by a New York Clearing House bank and payable in next day
funds. Delivery of the Underwritten Securities and the Option Securities shall
be made at such location as the Representative shall reasonably designate at
least one business day in advance of the Closing Date and payment for the
Securities shall be made at the office of LeBoeuf, Lamb, Xxxxxx & XxxXxx,
L.L.P., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx. Certificates for the
Securities shall be
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registered in such names and in such denominations as the Representative may
request not less than three full business days in advance of the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the Representative in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representative, at Seven World
Trade Center, New York, New York, on the date specified by the Representative
(which shall be within three business days after exercise of said option),
certificates for the Option Securities in such names and denominations as the
Representative shall have requested against payment of the purchase price
thereof to or upon the order of the Company by certified or official bank check
or checks drawn on or by a New York Clearing House bank and payable in next day
funds. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representative on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the
Option Securities, shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
5. AGREEMENTS. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination
of the offering of the Securities, the Company will not file any
amendment of the Registration Statement or supplement to the
Prospectus without your prior consent. Subject to the foregoing
sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing. The Company
will promptly advise the Representative (i) when the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when
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the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii) when,
prior to termination of the offering of the Securities, any amendment
to the Registration Statement shall have been filed or become
effective, (iv) of any request by the Commission for any amendment of
the Registration Statement or supplement to the Prospectus or for any
additional information, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose
and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the rules thereunder, the
Company promptly will prepare and file with the Commission, subject to
the second sentence of paragraph (a) of this Section 5, an amendment
or supplement which will correct such statement or omission or effect
such compliance.
(c) As soon as practicable, the Company will make
generally available to its security holders and to the Representative
an earnings statement or statements of the Company and its
subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(d) The Company will furnish to the Representative and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representative may reasonably request. The Company will file or
caused to be filed with Commission such reports on Form SR as may be
required by Rule 463 under the Act. The Company will pay the expenses
of printing or other production of all documents relating to the
offering.
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(e) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Representative may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities and
will pay the fee of the National Association of Securities Dealers,
Inc., in connection with its review of the offering.
(f) The Company will not, for a period of 180 days
following the Execution Time, without the prior written consent of the
Representative, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any other
shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock other than Merger Shares
issued to Eligible Members in exchange for their Membership Interests
pursuant to the Plan.
(g) The Company will use its best efforts to effect the
listing of the Securities and the Merger Shares on the New York Stock
Exchange.
(h) The Company confirms as of the date hereof that it
is in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date
is later, or if the information reported in the Prospectus, if any,
concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(i) Prior to or contemporaneously with the Closing Date,
the Company, SCPIE and the Post-Effective Subsidiaries will take all
actions reasonably necessary in order to consummate the Plan and the
transactions contemplated thereby.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and of its
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obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representative
agrees in writing to a later time, the Registration Statement will
become effective not later than (i) 6:00 PM, New York City time on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM, New York City time on
such date or (ii) 12:00 Noon on the business day following the day on
which the public offering price was determined, if such determination
occurred after 3:00 PM, New York City time on such date; if filing of
the Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) The Company shall have furnished to the
Representative the opinion of Xxxxxx & Xxxxxxx, counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus. Prior to the Effective Time,
AHIC and FGCC are the only subsidiaries of the Company.
Immediately after the Effective Time, the Post-Effective
Subsidiaries will be the only subsidiaries of the Company.
SCPIE has been and, until immediately prior to the Effective
Time, will be a reciprocal insurance exchange duly organized
under the laws of the State of California and has been and
will be in compliance in all material respects with the
requirements of the State of California providing for the
organization and regulation of reciprocal insurance exchanges;
and, through SCPIE Management has full power and authority to
own its properties and conduct its business as described in
the Prospectus. Each of the Post-Effective Subsidiaries has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and
conduct its business as described in the Prospectus. Each of
the Company, SCPIE and each Post-Effective Subsidiary is duly
qualified to do business as a foreign corporation and is in
good standing under the laws of each
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jurisdiction which requires such qualification or wherein it
owns or leases material properties or conducts material
business;
(ii) all the outstanding shares of capital stock
of each Post-Effective Subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable
and, immediately after the Effective Time, all outstanding
shares of capital stock of the Post-Effective Subsidiaries
will be owned by the Company, either directly or through
Post-Effective Subsidiaries, free and clear of any perfected
security interest and, to the knowledge of such counsel, after
due inquiry, any other security interest, claims, liens or
encumbrances;
(iii) the Company's authorized capitalization is as
set forth in the Prospectus; the capital stock of the Company
conforms to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Merger Shares have been duly and
validly authorized, and, when issued and delivered to Eligible
Members in exchange for their Membership Interests as provided
in the Plan, will be fully paid and nonassessable; the
Securities and the Merger Shares have been duly authorized for
listing, subject to official notice of issuance, on the New
York Stock Exchange; the certificates for the Securities and
the Merger Shares conform to the requirements of the Delaware
General Corporation Law and the New York Stock Exchange; and
neither the holders of outstanding shares of capital stock of
the Company, the Eligible Members nor the other policyholders
of SCPIE are entitled to preemptive or other rights to
subscribe for the Securities;
(iv) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Company, SCPIE or any of the Post-
Effective Subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise,
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit, which is not described or filed as
required; and the statements in the Prospectus under the
headings, "The Reorganization",
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"Business--Regulation", "Business--Litigation" and
"Description of Capital Stock" have been reviewed by such
counsel and fairly summarize the matters therein described;
(v) the Registration Statement has become
effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the
financial statements and other financial and statistical
information contained therein as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder; and such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) no consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as
may be required under the blue sky laws or insurance
securities laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the
Underwriters; and no consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated by the Plan,
except such as have been obtained and are in full force and
effect under the Act, the California Insurance Law, the
California Corporations Law and the blue sky laws and
insurance securities laws of various jurisdictions in
connection with the issuance of the Merger Shares to the
Eligible Members;
(viii) neither the issue and sale of the Securities,
nor the issue and delivery of the Merger Shares, nor
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the consummation of any other of the transactions contemplated
herein or in the Plan nor the fulfillment of the terms hereof
or of the Plan will conflict with, result in a breach or
violation or constitute a default under any law or the
charter, by-laws or other organizational document of the
Company, SCPIE or any of the Post-Effective Subsidiaries or
the terms of any [material] indenture or material other
agreement or material instrument to which the Company, SCPIE
or any of the Post-Effective Subsidiaries is a party or any
judgment, order or decree known to such counsel to be
applicable to the Company, SCPIE or any of the Post-Effective
Subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company, SCPIE or any of the Post-Effective
Subsidiaries;
(ix) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement;
(x) each of the Company and SCPIE Indemnity has
full corporate power and authority to execute and deliver the
Plan and to perform its respective obligations thereunder;
SCPIE (either directly or through SCPIE Management) has full
power and authority to execute and deliver the Plan and to
perform its obligations thereunder; the execution and delivery
of the Plan by the Company, SCPIE and SCPIE Indemnity have
been duly and validly authorized and approved by all required
action on the part of the Company, SCPIE and SCPIE Indemnity;
the Plan has been duly executed and delivered by the Company,
SCPIE and SCPIE Indemnity and constitutes a valid and legally
binding obligation of the Company, SCPIE and SCPIE Indemnity,
enforceable against each of them in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor
may be brought; the Plan conforms in all material respects to
the requirements of the California Insurance Law applicable to
the reorganization of reciprocal insurance exchanges into
stock insurance companies; all necessary approvals under the
California Insurance Law for the consummation of the
transactions contemplated by the Plan have been obtained; the
Reorganization and the Merger have been completed in
accordance with the Plan, the Commissioner's Order and the
California Insurance Law, and all the rights (including,
without limitation, rights in respect of contracts,
reinsurance treaties, leases, licenses and trademarks) and
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properties of SCPIE have accrued to, and become the rights and
properties of, SCPIE Indemnity, and all the rights of
creditors and liens of SCPIE have become the rights of
creditors and liens of SCPIE Indemnity;
(xi) the Merger Registration Statement has become
effective under the Act; any required filing of the Proxy
Statement/Prospectus, and any supplement thereto, pursuant to
Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Merger Registration Statement has been issued, no proceedings
for that purpose have been instituted or threatened and the
Merger Registration Statement and the Proxy
Statement/Prospectus (other than the financial statements and
other financial and statistical information contained therein
as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements
of the Act and the rules thereunder; and such counsel has no
reason to believe that at the effective date of the Merger
Registration Statement and on the Special Meeting Date, the
Merger Registration Statement contained any untrue statement
of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading or that the Proxy
Statement/Prospectus included any untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(xii) each of the Company and the Post-Effective
Subsidiaries owns, possesses or has obtained all material
governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its properties and
to carry on its business as currently conducted;
(xiii) each of the Insurance Subsidiaries is duly
licensed or authorized to conduct its insurance business under
the insurance laws of each jurisdiction in which it conducts
such business so as to require such licensing or
authorization; all such licenses or authorizations are in full
force and effect and such counsel is not aware of any event,
inquiry, investigation or proceeding that would reasonably be
expected to result in the suspension, revocation or limitation
of any such licenses or authorizations or otherwise impose any
limitation on the conduct of the business of the Company or
any Insurance Subsidiary,
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and to the best of such counsel's knowledge, there is no
sustainable basis for any such suspension, revocation or
limitation; to the best of such counsel's knowledge, each of
the Insurance Subsidiaries is in compliance with, and conducts
its businesses in conformity with, all applicable insurance
laws and regulations, except where the failure to so comply or
conform would not have a material adverse effect on the
condition, financial or otherwise, earnings, business,
prospects or results of operations of the Company, SCPIE and
the Post-Effective Subsidiaries, taken as a whole;
(xiv) to the best knowledge of such counsel, all
reinsurance treaties and arrangements to which any of the
Insurance Subsidiaries is a party are in full force and effect
and none of the Insurance Subsidiaries is in violation of or
in default in the performance, observance or fulfillment of,
any obligation, agreement, covenant or condition contained
therein and upon the effectiveness of the Merger, all such
treaties and arrangements to which SCPIE is a party shall
remain in full force and effect and inure to the benefit of,
and be enforceable by, SCPIE Indemnity;
(xv) neither the Company nor any of the
Post-Effective Subsidiaries is and, after giving effect to the
offering and sale of the Securities, neither the Company nor
any of the Post-Effective Subsidiaries will be, an "investment
company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of California [and the General Corporation Law of the State of
Delaware] or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Prospectus in
this paragraph (b) include any supplements thereto at the Closing
Date.
(c) The Representative shall have received from LeBoeuf,
Lamb, Xxxxxx & XxxXxx, L.L.P., counsel for the Underwriters, such
opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related
matters as the Representative may reasonably require, and
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the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon
such matters.
(d) The Company shall have furnished to the
Representative a certificate of the Company, signed by the Chairman of
the Board or the President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus, any supplement to the Prospectus and this
Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement or the Merger Registration
Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition, financial or other, earnings, business,
prospects, properties or results of operations of the Company,
SCPIE and the Post-Effective Subsidiaries considered as a
whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement
thereto).
(e) At the Execution Time and at the Closing Date, Ernst
& Young LLP shall have furnished to the Representative a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representative, confirming that they are independent accountants
within the meaning of the Act and the applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited combined financial
statements and financial statement schedules of SCPIE and
OSCAP and the audited balance sheet of the Company included in
the Registration Statement and the Prospectus and reported on
by them comply in form in all material respects with the
applicable accounting
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requirements of the Act and the related published rules and
regulations thereunder;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by SCPIE, OSCAP and the
Company; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the Board
of Governors, Board of Trustees, Board of Directors, Members,
shareholders, directors and committees of SCPIE, OSCAP and the
Company and its subsidiaries, [as applicable]; and inquiries
of certain officials of SCPIE, OSCAP and the Company who have
responsibility for financial and accounting matters of SCPIE,
OSCAP and the Company as to transactions and events subsequent
to December 31, 1995, nothing came to their attention which
caused them to believe that:
(A) any unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply in form in all material
respects with applicable accounting requirements of
the Act and with the published rules and regulations
of the Commission with respect to registration
statements on Form S-1; and said unaudited financial
statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Registration
Statement and the Prospectus; and
(B) with respect to the period subsequent to
[ ], 1996, there were any changes, at a specified
date not more than five business days prior to the
date of the letter, in the long-term debt of SCPIE
and OSCAP or the Company and its subsidiaries or the
capital stock of the Company or decreases in the
policyholders' equity and [ ] of SCPIE and OSCAP or
the stockholder's equity of the Company as compared
with the amounts shown on the combined balance sheet
of SCPIE and OSCAP and the balance sheet of the
Company included in the Registration Statement and
the Prospectus, or for the period from [ ],
1996 to such specified date there were any decreases,
as compared with the corresponding period in the
preceding year in premiums earned, net investment
income, income before policyholder dividends and
Federal income taxes of SCPIE and OSCAP and net
income, except in all instances for changes or
decreases set forth
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in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representative;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
SCPIE, OSCAP and the Company and its subsidiaries) set forth
in the Registration Statement and the Prospectus, including
the information set forth under the captions "Summary
Financial and Operating Data" and "Selected Financial and
Operating Data" in the Prospectus, agrees with the accounting
records of SCPIE and OSCAP, excluding any questions of legal
interpretation.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Representative shall have also received from Ernst & Young
LLP a letter stating that the Company's, SCPIE's, OSCAP's and their
subsidiaries' system of internal accounting controls taken as a whole
is sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be
material in relation to the combined financial statements of SCPIE and
OSCAP and the balance sheet of the Company and its subsidiaries.
(f) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the business or properties of
the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(g) At the Execution Time, the Company shall have
furnished to the Representative a letter substantially in the form of
Exhibit A hereto from the Company addressed to the Representative, in
which each such person agrees not
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to offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce an offering of, any shares of Common Stock
beneficially owned by such person or any securities convertible into,
or exchangeable for, shares of Common Stock for a period of 180 days
following the Execution Time without the prior written consent of the
Representative, other than shares of Common Stock disposed of as bona
fide gifts.
(h) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of any of the Insurance
Subsidiaries by A.M. Best Company, Inc. or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(i) Prior to or contemporaneously with the Closing Date,
each of the actions required to occur and conditions required to be
satisfied on or prior to the Effective Time pursuant to the Plan or
the Commissioner's Order shall have occurred or been satisfied and the
transactions contemplated by the Plan shall have been consummated in
accordance with the Plan, the Commissioner's Order and the California
Insurance Law.
(j) On or prior to the Execution Time, the Securities and
the Merger Shares shall have been duly authorized for listing on the
New York Stock Exchange, subject only to official notice of issuance.
(k) Prior to the Closing Date, the Company shall have
furnished to the Representative such further information, certificates
and documents as the Representative may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel
for the Underwriters, at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the
Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale
of the Securities provided for herein is not consummated
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because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part
of the Company or SCPIE Indemnity to perform any agreement herein or comply
with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company
agrees to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, each of its directors, each officer of the
Company who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity to each Underwriter, but only with reference
to written information relating to such Underwriter furnished to the Company by
or on behalf of such Underwriter
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through the Representative specifically for inclusion in the documents referred
to in the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and in the first, second, third, fourth, seventh and ninth paragraphs under
the heading "Underwriting" in any Preliminary Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus, and you, as the Representative, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of
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the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively, "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and by the
Underwriters on the other from the offering of the Securities; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses), and benefits received by the Underwriters shall be
deemed to be equal to the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Underwriters. The Company
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act
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or the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter, and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. DEFAULT BY AN UNDERWRITER. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Securities set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not purchase
all the Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representative shall determine
in order that the required changes in the Registration Statement and the
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to
termination in the absolute discretion of the Representative, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange shall have been suspended or limited
or minimum prices shall have been established on such Exchange, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or
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escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of their officers, directors or controlling persons referred to
in Section 8 hereof, and will survive delivery of and payment for the
Securities. The provisions of Section 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Representative, will
be mailed, delivered or telegraphed and confirmed to Salomon Brothers Inc at
Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at 0000
Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000; Attention: Xxxxxx X.
Xxx; President.
13. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by
and construed in accordance with the laws of the State of New York.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
SCPIE HOLDINGS INC.
By:____________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
Salomon Brothers Inc
By:
----------------------
Vice President
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
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SCHEDULE I
Number of Shares
Underwriters to be Purchased
------------ ----------------
Salomon Brothers Inc . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . 2,000,000
=========
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