EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXX MUTUAL INSURANCE COMPANY
AND
XXXXXXX XXXXXX XXXXXXX, XXXXXXX XXXXXX XXXXXXXXXX, XX., XXXXXXX XXXXXX
XXXXXXXXXX, XX., XXXXXX XXXXXXX XXXXXXXXXX, XX., XXXXXXX X. XXXXXXX, XXXXXXX
XXXXX XXXXXXXXX
DATED AS OF MAY 9, 2001
Table of Contents
Page
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ARTICLE I - DEFINITIONS................................................................................... 2
1.1 Construction................................................................................... 2
1.2 Definitions.................................................................................... 2
ARTICLE II - PURCHASE AND SALE OF STOCK.................................................................... 5
2.1 Purchase and Sale of Series A Preferred Stock.................................................. 5
2.2 Closing; Closing Date.......................................................................... 5
2.3 Closing Deliveries............................................................................. 5
ARTICLE III - REPRESENTATIONS AND WARRANTIES................................................................ 6
3.1 Ownership of Series A Preferred Stock.......................................................... 6
3.2 Authority...................................................................................... 6
3.3 Representations Complete....................................................................... 7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER....................................................... 7
4.1 Organization, Standing and Power............................................................... 7
4.2 Authority...................................................................................... 7
4.3 Litigation..................................................................................... 8
4.4 Broker's and Finders' Fees..................................................................... 8
4.5 Board Approval................................................................................. 8
4.6 Financial Capability........................................................................... 8
4.7 Representations Complete....................................................................... 9
ARTICLE V - CONDUCT PRIOR TO THE EFFECTIVE TIME........................................................... 9
5.1 No Solicitation................................................................................ 9
5.2 Consents; Cooperation.......................................................................... 9
5.3 Legal Requirements............................................................................. 10
5.4 Best Efforts and Further Assurances............................................................ 10
ARTICLE VI - CONDITIONS 10
6.1 Conditions to Obligations of Each Party........................................................ 10
6.2 Additional Conditions to Obligations of the Series A Holders................................... 11
6.3 Additional Conditions to the Obligations of Buyer.............................................. 11
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER............................................................. 12
7.1 Termination.................................................................................... 12
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Table of Contents
(continued)
Page
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7.2 Effect of Termination.......................................................................... 13
7.3 Expenses and Termination Fees. Whether or not the transactions contemplated by this
Agreement is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including the fees and expenses of
its advisers, accountants and legal counsel) shall be paid by the Party incurring such
expense........................................................................................ 14
7.4 Amendment...................................................................................... 14
7.5 Extension; Waiver.............................................................................. 14
ARTICLE VIII- INDEMNIFICATION............................................................................... 14
8.1 Indemnification By Series A Holders............................................................ 14
8.2 Indemnification By Buyer....................................................................... 15
8.3 Limitation of Indemnification Obligation....................................................... 16
8.4 Additional Limitation of Indemnification Obligation of Series A Holders........................ 16
ARTICLE IX - GENERAL PROVISIONS............................................................................ 17
9.1 Survival Past Effective Time................................................................... 17
9.2 Notices........................................................................................ 17
9.3 Counterparts................................................................................... 18
9.4 Entire Agreement; Nonassignability; Parties in Interest........................................ 18
9.5 Severability................................................................................... 18
9.6 Remedies Cumulative............................................................................ 18
9.7 Governing Law.................................................................................. 19
9.8 Rules of Construction.......................................................................... 19
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EXHIBIT A - Third Amended and Restated Certificate of Incorporation of FHI
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT(this "Agreement") is made and entered
into as of May 9, 2001, by and among XXXXXX MUTUAL INSURANCE COMPANY, a
Pennsylvania corporation ("Buyer"), and XXXXXXX XXXXXX XXXXXXX, XXXXXXX XXXXXX
XXXXXXXXXX, XX., XXXXXXX XXXXXX XXXXXXXXXX, XX., XXXXXX XXXXXXX XXXXXXXXXX, XX.,
XXXXXXX X. XXXXXXX, and XXXXXXX XXXXX XXXXXXXXX, collectively the holders of all
the Series A Preferred Stock (the "Series A Holders") issued by Franklin Holding
Company, Inc. ("FHI"). Buyer and the Series A Holders are sometimes collectively
referred to herein as the "Parties" and individually as a "Party."
RECITALS
H. Xxxxxx Xxxxx ("Xxxxx") owns (i) 210,000 shares of FHI Class A Voting
Common Stock (the "Class A Stock"), and (ii) and options to acquire 590,000
shares of Class A Stock (the "Options").
The Series A Holders own 10,000 shares of FHI Series A Convertible
Redeemable Preferred Stock (the "Series A Preferred Stock").
On or prior to the date of closing contemplated hereunder, Xxxxx will
exchange the options to acquire 590,000 shares of Class A Stock for options (as
so exchanged, the "Options") to acquire 590,000 shares of Class B Non-Voting
Common Stock (the "Class B Stock")
Xxxxx has agreed to sell to Buyer, and Buyer has agreed to purchase
from Xxxxx, 102,900 shares of Class A Stock and Options to acquire 295,000
shares of Class B Stock.
The Series A Holders have agreed to sell to the Buyer, and the Buyer
has agreed to purchase from the Series A Holders, 5,000 shares of Series A
Preferred Stock.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the Parties
agree as follows:
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ARTICLE I -
DEFINITIONS
1.1 Construction. References to any federal, state, local
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Unless the context otherwise requires, all references to "Sections," "Exhibits"
and "Schedules" shall be deemed to refer to Sections within or Exhibits and
Schedules to this Agreement. All Exhibits and Schedules to this Agreement are
hereby incorporated herein. The word "including" shall mean including without
limitation. Unless the context otherwise requires, any word used in the singular
form shall be interpreted as including the plural form thereof, and vice versa,
and any word used in one gender shall be interpreted as including the other
gender, as necessary or appropriate. Any reference to facts or information
"known" to a Party that is an entity, or words having similar meaning, shall
refer to the conscious awareness of information of the directors and those
responsible officers and employees of such Party and its Subsidiaries charged
with administrative or operational responsibility for such matters, and that is
known or would be known to any one or more of them following reasonable
investigation under the circumstances.
1.2 Definitions. Certain capitalized terms used in this
Agreement shall have the meanings ascribed to such terms in this Section 1.2,
unless the context clearly requires otherwise.
(a) "Buyer" shall mean Xxxxxx Mutual Insurance
Company, a Pennsylvania corporation.
(b) "Agreement" shall mean this Stock Purchase
Agreement.
(c) "Class A Stock" means the Class A Voting
Common Stock, $0.10 par value per share, of FHI.
(d) "Class B Stock" means the Class B Non-Voting
Stock, $0.10 par value per share, of FHI.
(e) "Closing" shall have the meaning set forth
in Section 2.2.
(f) "Closing Date" shall have the meaning set
forth in Section 2.2.
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(g) "Contract" or "Contracts" means any
mortgage, indenture, lease, note, contract or other agreement or instrument to
which a Person is a party or by which such Person or such Person's assets are or
may be bound.
(h) "Xxxxx" means H. Xxxxxx Xxxxx, an
individual, and his heirs, personal representatives and assigns.
(i) "Xxxxx Stock Purchase Agreement" means the
Stock Purchase Agreement among, Xxxxx, FHI and Buyer pursuant to which Buyer
will acquire a portion of Xxxxx' stock in FHI.
(j) "Effective Time" shall have the meaning set
forth in Section 2.2.
(k) "FHI" shall mean Franklin Holding Company,
Inc., a Delaware corporation.
(l) "FHI Capital Stock" means the Class A Stock,
the Class B Stock, the Series A Preferred Stock and the Series B Preferred
Stock.
(m) "Governmental Entity" means any court,
administrative agency or commission or other governmental or regulatory agency,
authority or instrumentality of any federal, state, local or foreign government,
of any kind, type or nature.
(n) "Liens" shall have the meaning set forth in
Section 3.1.
(o) "Material Adverse Effect" with respect to
any Person means any event, change, condition or effect, including consummation
of the transactions contemplated by this Agreement, that (i) has, or could
reasonably be expected to have, a materially adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or results of operations of such Person and its Subsidiaries, taken as a whole
(whether or not arising from transactions in the ordinary course of business)
(excluding changes in security portfolio values due to changes in interest rates
or changes in statutory or generally accepted accounting principles that affect
the insurance industry as a whole), (ii) materially impairs, or could reasonably
be expected to materially impair, the ability of such Person to perform its
obligations under this Agreement or any related agreement or to consummate the
transactions contemplated by this Agreement, or (iii) causes A. M. Best, either
orally or in writing, to advise such Person that it's A. M. Best rating will be,
or is likely to be, reduced.
(p) "Options" means the options to acquire
590,000 shares of Class B Stock.
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(q) "Parties" shall mean Buyer and the Series A
Holders, collectively.
(r) "Party" shall mean Buyer and any one of the
Series A Holders, individually.
(s) "Person" means any natural person or
individual, trustee, corporation, general or limited partnership, limited
liability company or partnership, joint venture, joint stock company, bank,
firm, Governmental Entity, trust, association, organization or unincorporated
entity of any kind.
(t) "Series A Holders" means Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx., Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx., Xxxxxx
Xxxxxxx Xxxxxxxxxx, Xx., Xxxxxxx X. Xxxxxxx, Xxxxxxx Xxxxx Xxxxxxxxx and their
respective heirs, personal representatives and assigns.
(u) "Series A Preferred Stock" means the Series
A Convertible Redeemable Preferred Stock, $100 par value per share, of FHI.
(v) "Series B Preferred Stock" means the Series
B Cumulative Redeemable Preferred Stock, $100 par value per share, of FHI.
(w) "Shareholder Documents" means the following
documents and instruments, copies of which have been furnished to the Buyer:
Certificate of Incorporation and By-laws of FHI, the Subscription and
Shareholders Agreement among Xxxxx, FHI and the Series A Holders, the Securities
Purchase Agreement between FHI and the Series B Holder, the Class B Non-voting
Common Stock Purchase Warrant issued by FHI to the Series B Holder, and the
Internal Shareholders Agreement between Xxxxx and the Series B Holder.
(x) "Subsidiary" or "Subsidiaries" shall mean,
with respect to any Party (other than an individual), any corporation, limited
liability company, partnership, trust, limited partnership, joint venture, or
other business association or entity, at least a majority of the voting
securities or economic interests of which is directly or indirectly owned or
controlled by such Party or by any one or more of its Subsidiaries.
(y) "Takeover Proposal" shall have the meaning
set forth in Section 5.1.
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ARTICLE II -
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Series A Preferred Stock.
Subject to the terms and conditions of this Agreement, on the Closing Date, each
Series A Holder shall sell to Buyer, and Buyer shall purchase from each Series A
Holder, that number of shares of Series A Preferred Stock set forth opposite the
name of the Series A Holder as follows:
Xxxxxxx Xxxxxx Xxxxxxx 2,500 shares
Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx. 500 shares
Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx. 500 shares
Xxxxxx Xxxxxxx Xxxxxxxxxx, Xx. 500 shares
Xxxxxxx X. Xxxxxxx 500 shares
Xxxxxxx Xxxxx Xxxxxxxxx 500 shares
The purchase price for the Series A Preferred Stock shall be $200 per share, or
$1,000,000 in the aggregate.
2.2 Closing; Closing Date. The Closing shall take place
at the offices of Xxxxxxx & Xxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx at 10:00 A.M. on that date (the "Closing Date") that is five (5)
business days after the satisfaction of all conditions to closing (other than
satisfaction of conditions to closing that can only be satisfied at closing), or
at such time and date thereafter as the Parties may mutually agree (the
"Effective Time").
2.3 Closing Deliveries.
(a) By the Series A Holders. At the Closing,
each Series A Holder shall deliver, or cause to be delivered:
(i) A share certificate to the Buyer
for that number of shares of Series A Preferred Stock set forth
opposite such Series A Holder's name in Section 2.1; and
(ii) All other documents and items
required to be delivered by a Series A Holder pursuant to Section 6.3.
(b) By Buyer. At the Closing, Buyer shall
deliver, or cause to be delivered, a wire transfer of immediately available
funds, to the accounts designated in writing by each of the Series A Holders
prior to the Closing Date, the
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amount of the purchase price for the Shares being acquired by the Buyer from
such Series A Holder.
ARTICLE III -
REPRESENTATIONS AND WARRANTIES
Each of the Series A Holders represents and warrants, for himself, but
not jointly, that the statements in this Article III are true and correct. The
representations and warranties of the Series A Holders contained in this Article
III and elsewhere in this Agreement or any other document delivered pursuant to
or contemplated by this Agreement, shall not be affected or deemed waived by
reason of the fact that Buyer and/or its representatives knew or should have
known that any such representation or warranty is or might be untrue or
inaccurate in any respect.
3.1 Ownership of Series A Preferred Stock. Each Series A
Holder owns beneficially and of record all outstanding shares of Series A
Preferred Stock set forth opposite his name in Section 2.1 hereof. Each Series A
Holder owns the shares of Series A Preferred Stock set forth opposite his name
in Section 2.1 free and clear of any charge, mortgage, pledge, security
interest, restriction, claim, lien, or encumbrance (collectively, "Liens").
Except as set forth on Schedule 2.1 or in the Shareholder Documents, there are
no outstanding voting agreements or proxies, or other commitments or agreements
of any character relating to the Series A Preferred Stock or otherwise
obligating any Series A Holder to transfer, sell, purchase or redeem any shares
of Series A Preferred Stock. Except for options to acquire shares of Class B
Stock under certain circumstances pursuant to Section 7.4 of a Subscription and
Shareholder Agreement dated July 17, 1997 by and among Xxxxx, FHI and the Series
A Holders, none of the Series A Holders have the right to acquire any additional
shares of FHI Capital Stock.
3.2 Authority. The Series A Holders have all requisite
power and authority, to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Series A Holders and constitutes a valid and binding
obligation of each of the Series A Holders in accordance with its terms, except
as enforceability may be limited by bankruptcy and other laws affecting the
rights and remedies of creditors generally and general principles of equity.
Except as set forth in the Shareholder Documents or as described on Schedule
3.2, the execution and delivery of this Agreement by the Series A Holder does
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
amendment, cancellation or
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acceleration of any obligation or loss of any benefit under (i) any Contract to
which the Series A Holders or any of them is a party or by which any of them is
bound, or (ii) any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Series A
Holders or any of their properties or assets, or to which the Series A Holders
or any of their properties or assets is subject or bound or that give rise to
any Lien. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to the Series A Holders in connection with the execution and delivery of
this Agreement, or the consummation of the transactions contemplated hereby,
except for the approval of the Pennsylvania Department of Insurance.
3.3 Representations Complete. No statement, certificate,
instrument or other writing furnished or to be furnished by the Series A Holders
pursuant to this Agreement or any Schedule or Exhibit hereto or any certificate,
instrument or other writing furnished or to be furnished by the Series A Holders
pursuant hereto, contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE IV -
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represent and warrant to each of the Series A Holders as
follows:
4.1 Organization, Standing and Power. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. Buyer has the requisite corporate power to
own its properties and to carry on its business as now being conducted and as
proposed to be conducted and is duly qualified to do business and is in good
standing in each jurisdiction where its ownership or leasing of property or the
conduct of its business requires it to be so qualified. Buyer is not in
violation of any of the provisions of its Articles of Incorporation or Bylaws.
4.2 Authority. Buyer has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and constitutes the
valid and
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binding obligations of Buyer enforceable against Buyer in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity. The execution and delivery of this Agreement does not, and will not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or loss of a benefit under (i)
any provision of the Articles of Incorporation or Bylaws of Buyer, or (ii) any
Contract, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or any of its
properties or assets, or to which Buyer or any of its properties or assets is
subject or bound or that give rise to any Liens. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to Buyer in connection with the execution
and delivery of this Agreement or the consummation by Buyer of the transactions
contemplated hereby, except for the filing of a Form A with the Pennsylvania
Department of Insurance and the obtaining of approval therefrom.
4.3 Litigation. There is no agreement, judgment,
injunction, decree or order against Buyer or any of its Subsidiaries, or, to the
knowledge of Buyer and its Subsidiaries, any of their respective directors or
officers (in their capacities as such) that would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
has or could reasonably be expected to have a Material Adverse Effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement.
Neither Buyer nor any of its Affiliates has been advised by a Person that such
Person is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such agreement, judgment,
injunction, decree or order.
4.4 Broker's and Finders' Fees. Except for a payment
obligation to CIC, Inc. to be paid equally by Buyer and FHI, Buyer has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.5 Board Approval. The Board of Directors of Buyer has
approved this Agreement.
4.6 Financial Capability. Buyer has and shall have, as of
the Effective Time, sufficient funds to consummate the transactions
contemplated by this Agreement.
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4.7 Representations Complete. No statement, certificate,
instrument or other writing furnished or to be furnished by Buyer pursuant to
this Agreement, or any certificate furnished or to be furnished by Buyer
pursuant to this Agreement, contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE V -
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 No Solicitation. The Series A Holders and their
agents will not, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Takeover Proposal (as defined herein), or engage in
negotiations with, or disclose any nonpublic information relating to FHI or any
of its Subsidiaries to, or afford access to the properties, books or records of
FHI or any of its Subsidiaries to, any Person that has advised FHI, Xxxxx or the
Series A Holders that it may be considering making, or that has made, a Takeover
Proposal. The Series A Holders will promptly notify Buyer after receipt of any
Takeover Proposal or any notice that any Person is considering making a Takeover
Proposal or any request for nonpublic information relating to FHI or any of its
Subsidiaries or for access to the properties, books or records of FHI or any of
its Subsidiaries by any Person that has advised FHI, Xxxxx or any Series A
Holder that it may be considering making, or that has made, a Takeover Proposal,
and will keep Buyer fully informed of the status and details of any such
Takeover Proposal notice, and shall provide Buyer with a true and complete copy
of such Takeover Proposal notice or any amendment thereto, if in writing, or a
complete written summary thereof, if not in writing. As used herein, "Takeover
Proposal" means any offer or proposal for, or any indication of interest in, a
merger or other business combination involving FHI or any of its Subsidiaries or
the acquisition of 20% or more of the outstanding shares of capital stock of
FHI, or a significant portion of the assets of, FHI or any of its Subsidiaries,
other than the transactions contemplated by this Agreement.
5.2 Consents; Cooperation. Each of Buyer and the Series A
Holders shall promptly apply for or otherwise seek, and use its reasonable best
efforts to obtain, all consents and approvals required to be obtained by it or
them for the consummation of the transactions contemplated by this Agreement,
and those required to be obtained by the Buyer from the Pennsylvania Department
of Insurance. The Parties will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals
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made or submitted by or on behalf of any Party in connection with proceedings
before any Insurance Authority.
5.3 Legal Requirements. Each of Buyer and the Series A
Holders shall take all reasonable actions necessary to comply promptly with all
legal requirements that may be imposed on any of them with respect to the
consummation of the transactions contemplated by this Agreement, shall promptly
cooperate with and furnish information to any Party necessary in connection with
any such requirements imposed upon such other Party in connection with the
consummation of such transactions, and shall take all reasonable actions
necessary to obtain (and cooperate with the other Parties in obtaining) any
consent, approval, order or authorization of, or any registration, declaration
or filing with, any Governmental Entity or other Person, required to be obtained
or made in connection with the taking of any action contemplated by this
Agreement.
5.4 Best Efforts and Further Assurances. Each of the
Parties shall use reasonable best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
Closing hereunder. Each Party, at the reasonable request of another Party, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting completely the
consummation of the transactions contemplated hereby.
ARTICLE VI -
CONDITIONS
6.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to satisfaction at or
prior to the Effective Time of the following conditions, any of which may be
waived, in writing, by agreement of all Parties:
(a) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any Governmental Entity or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated by this
Agreement shall be in effect, nor shall any proceeding brought by a Governmental
Entity seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the transactions contemplated by this Agreement, that makes
the consummation of the transactions contemplated by this Agreement illegal or
impractical. In the event an
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injunction or other order shall have been issued, each Party shall use
commercially reasonable efforts to have such injunction or other order lifted.
(b) Governmental Approvals. The Parties and
their respective Subsidiaries shall have timely filed with and obtained from
each Governmental Entity (including all Insurance Authorities) all filings,
notices, approvals, waivers and consents necessary for consummation of the
transactions contemplated by this Agreement and the transactions contemplated
hereby, including such filings, notices, approvals, waivers and consents as may
be required under applicable state insurance laws.
(c) Xxxxx Stock Purchase Agreement. The
transactions contemplated by the Xxxxx Stock Purchase Agreement shall be
completed prior to, or contemporaneously with, the transactions contemplated by
this Agreement.
6.2 Additional Conditions to Obligations of the Series A
Holders. The obligations of the Series A Holders to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
of which may be waived, in writing, by the Series A Holders.
(a) Representations, Warranties and Covenants.
(i) The representations and warranties of Buyer in this Agreement shall be true
and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true in all
respects) on and as of the date hereof and the Effective Time as though such
representations and warranties were made on and as of such times, and (ii) Buyer
shall have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by Buyer as of the Effective Time.
(b) Certificate of Buyer. The Series A Holders
shall have received a certificate executed on behalf of Buyer by its President
certifying that the condition set forth in Section 6.2(a) shall have been
fulfilled.
6.3 Additional Conditions to the Obligations of Buyer.
The obligations of Buyer to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any of which may be
waived, in writing, by Buyer:
(a) Representations, Warranties and Covenants.
(i) The representations and warranties of the Series A Holders in this Agreement
shall be
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true and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true in all
respects) on and as of the date hereof and the Effective Time as though such
representations and warranties were made on and as of such times, and (ii) the
Series A Holders shall have performed and complied in all material respects with
all covenants, obligations and conditions of this Agreement required to be
performed and complied with by them as of the Effective Time.
(b) Third Party Consents. FHI shall have
obtained, and Buyer shall have been furnished with evidence reasonably
satisfactory to it, of the consent or approval of those Persons whose consent or
approval shall be required in connection with the transactions contemplated by
this Agreement under any material Contract of FHI or any of its Subsidiaries or
otherwise, except where failure to obtain such consent would not have a Material
Adverse Effect on FHI.
(c) Injunctions or Restraints on Conduct of
Business. No temporary restraining order, preliminary or permanent injunction or
other order issued by any Governmental Entity or other legal or regulatory
restraint provision limiting or restricting Buyer's conduct or operation of the
business of FHI and its Subsidiaries following the transactions contemplated by
this Agreement shall be in effect, nor shall any proceeding brought by any
Governmental Entity seeking the foregoing be pending or threatened in writing.
(d) No Material Adverse Changes. There shall not
have occurred any event that could cause a Material Adverse Effect on FHI.
(e) Consent and Waiver of American Reinsurance
Company. American Reinsurance Company, as the holder of the Series B Preferred
Stock, shall have consented in writing to the transactions contemplated hereby.
(f) Certificate of Incorporation. All of the
shareholders of FHI shall have consented to the adoption by FHI of the Third
Amended and Restated Certificate of Incorporation attached hereto as Exhibit A.
ARTICLE VII -
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. At any time prior to the Effective Time
this Agreement may be terminated:
(a) by mutual consent of Buyer and all of the
Series A Holders;
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(b) by Buyer or the Series A Holders, if,
without fault of the terminating Party, the Closing shall not have occurred on
or before September 30, 2001 (provided a later date may be agreed upon in
writing by the Parties, and provided further that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any Party whose
action or failure to act has been the cause of or resulted in the failure of the
transactions contemplated by this Agreement to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement);
(c) by Buyer, if it has terminated the Xxxxx
Stock Purchase Agreement in accordance with its terms or if any of the Series A
Holders shall materially breach any of their representations, warranties or
obligations hereunder and such breach shall not have been cured within fifteen
(15) business days following receipt by the Series A Holders of written notice
of such breach, or if such breach cannot be cured by the Series A Holders within
such time period but can be cured by the Series A Holders prior to the Effective
Time and the Series A Holders has not commenced actions reasonably necessary (in
the opinion of Buyer) to cure such breach;.
(d) by the Series A Holders, if Buyer shall
materially breach any of its representations, warranties or obligations
hereunder and such breach shall not have been cured within fifteen (15) business
days following receipt by Buyer of written notice of such breach, or if such
breach cannot be cured by Buyer within such time period but can be cured by
Buyer prior to the Effective Time and Buyer has not commenced actions reasonably
necessary (in the opinion of FHI) to cure such breach;
(e) by Buyer if a Takeover Proposal shall have
occurred and FHI's Board of Directors does not within ten (10) business days of
such occurrence (i) reconfirm its approval of this Agreement and the
transactions contemplated hereby, and (ii) reject such Takeover Proposal;
(f) by any Party if any permanent injunction or
other order of a Governmental Entity preventing the consummation of the
transactions contemplated by this Agreement shall have become final and
non-appealable.
7.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of the Series A
Holders or Buyer or its officers, directors, shareholders or Affiliates, except
to the extent that such termination results from the breach by a Party of any of
its representations, warranties or covenants in this Agreement; provided that
the provisions of Section 7.3, Article VIII, Article IX, and this Section 7.2
shall remain in full force and
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effect and survive any termination of this Agreement; provided further, that
notwithstanding anything to the contrary contained in this Agreement, if this
Agreement is terminated by a Party because of the breach of this Agreement by
another Party or because one or more of the conditions to the terminating
Party's obligations under this Agreement is not satisfied as a result of another
Party's failure to comply with its obligations hereunder, the terminating
Party's right to pursue all legal remedies shall survive such termination
unimpaired.
7.3 Expenses and Termination Fees. Whether or not the
transactions contemplated by this Agreement is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the Party incurring such
expense.
7.4 Amendment. The Parties may amend this Agreement at
any time by execution of an instrument in writing signed on behalf of each of
the Parties.
7.5 Extension; Waiver. At any time prior to the Effective
Time any Party may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other Parties, (ii)
waive any inaccuracies in the representations and warranties made to such Party
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
Party contained herein. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Party.
ARTICLE VIII -
INDEMNIFICATION
8.1 Indemnification By Series A Holders. Subject to the
terms and conditions of this Section 8.1, which shall become effective upon
Closing, each Series A Holders shall indemnify, defend and hold harmless Buyer,
from, against and with respect to any claim, liability, obligation, loss,
damage, deficiency, assessment, encumbrance, judgment, cost, expense (including,
without limitation, attorney fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand), of any kind or character, arising
out of or in any manner incident, relating or attributable to (i) any inaccuracy
in any representation or any breach or failure of any warranty, covenant or
agreement of FHI, Xxxxx or the Series A Holders whether set forth in this
Agreement, the Xxxxx Stock Purchase Agreement or the Schedules attached hereto
or thereto, or in any certificate, instrument of
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transfer or other document or agreement executed by the Series A Holders in
connection with this Agreement or otherwise made or given in connection with
this Agreement, or (ii) any failure by FHI, Xxxxx or the Series A Holders to
perform or observe, or to have performed or observed, in full any covenant,
agreement or condition to be performed or observed by FHI, Xxxxx or the Series A
Holders under this Agreement or the Xxxxx Stock Purchase Agreement or under any
certificates or other documents or agreements executed by the Series A Holders
in connection with this Agreement. The matters specified in clauses (i) and (ii)
above are hereinafter referred to as "Indemnifiable Claims".
8.2 Indemnification By Buyer. Subject to the terms and
conditions of this Section 8.2, Buyer shall indemnify, defend and hold harmless
the Series A Holders from, against and with respect to any claim, liability,
obligation, loss, damage, deficiency, assessment, encumbrance, judgment, cost,
expense (including, without limitation, attorneys' fees and costs and expenses
incurred in investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand), of any kind or
character, arising out of or in any manner incident, relating or attributable to
(i) any inaccuracy in any representation or any breach or failure of any
warranty, covenant or agreement of Buyer set forth in this Agreement or in any
certificate, other document or agreement executed by Buyer in connection with
this Agreement or otherwise made or given in connection with this Agreement, and
(ii) any failure by Buyer to perform or observe, or to have performed or
observed, in full any covenant, agreement or condition to be performed or
observed by Buyer under this Agreement or under any certificate or other
documents or agreement executed by Buyer in connection with this Agreement.
8.3 Classification of Breach. Section 8.1 shall be the
exclusive remedy of Buyer against the Series A Holders in regard to any
Indemnifiable Claim. In the event that the Indemnifiable Claim arises from a
misrepresentation or breach of covenant by a Series A Holder under this
Agreement ("Type I Breach"), his liability shall be for his own breach only, but
shall be for the full amount of the Indemnifiable Claim arising from his breach
and without any limitation on the time in which the notice of the claim must be
given to him by the Buyer. In the event that the Indemnifiable Claim arises from
a misrepresentation or breach of covenant by Xxxxx or FHI under or in connection
with the Xxxxx Stock Purchase Agreement (Type II Breach "), then the liability
of the Series A Holders shall be joint and several, but subject to all of the
limitations set forth in the remaining Sections of this Article VIII.
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8.4 Limitation on Indemnification Obligation - Type II
Breach. Series A Holders shall have no obligation with respect to any
Indemnifiable Claim arising from a Type II Breach to the extent:
(a) such claim for indemnity does not exceed
Seventy-Five Thousand Dollars ($75,000) and if all such claims exceed
Seventy-Five Thousand Dollars ($75,000) in the aggregate, the Series A Holders
shall be liable for the full amount in excess of Seventy-Five Thousand Dollars
($75,000), subject to the other limitations set forth in this Article VIII;
(b) such claim for indemnity exceeds, or all
such claims for indemnity (inclusive of such claim) exceed, subject to the other
limitations set forth in this Article VIII, the purchase price paid to such
Series A Holders under this Agreement;
(c) the loss, event, liability or matter giving
rise thereto is covered by insurance or reinsurance proceeds or other salvage
reasonably recoverable or actually received by Buyer or FHI on account of the
event that gave rise to the claim;
(d) the event, liability or matter giving rise
thereto provides the Buyer or FHI with any tax benefit; or
(e) the claim is for other than direct
compensatory damages, unless the claim arises from a third party asserting
another form of damages.
8.5 Time Limits for Claims against the Series A Holders
- Type II Breach. The Series A Holders shall have no obligation with respect to
any Indemnifiable Claim arising from a Type II Breach unless Buyer provides
written notice to the Series A Holders within the later of:
(a) One year after the Closing Date; or
(b) if the basis for such claim arises from a
breach of any representation or warranty or covenant relating to "Taxes" (as
defined in the Xxxxx Stock Purchase Agreement), in which event the claim may be
asserted any time within the applicable statute of limitations.
8.6 Additional Limitation of Indemnification Obligation
of Series A Holders - Type II Breach. In the event that the Series A Holders
shall become obligated to provide indemnification under Section 8.1 in regard to
a Type II Breach, the liability of each Series A Holder shall not exceed the
product of (i) the amount of any such liability as determined after application
of the limitations set forth in Section 8.4, (ii) 0.145, and (iii) a fraction
the numerator of
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which is the number of shares of Series A Preferred Stock owned by the Series A
Holder on the date hereof and the denominator of which is 10,000.
ARTICLE IX -
GENERAL PROVISIONS
9.1 Survival Past Effective Time. The representations,
warranties, covenants and agreements set forth in this Agreement shall survive
the Effective Time, except as provided in Section 8.5.
9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with confirmation of receipt)
to the parties at the following address (or at such other address for a party as
shall be specified by like notice):
if to Buyer to:
Xxxxxx Mutual Insurance Company
Xxxxx 00 Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx
Attention: Xxxxxx X. Speaker,
President and Chief
Executive Officer
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
with a copy to:
Xxxxxxx & Xxx
0000 Xxxxxxxx Xxxx
X. X. Xxx 000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
to the Series A Holders, to their respective addresses shown
on Schedule 9.2, with copies as shown on that Schedule and a copy to:
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Franklin Holding Company, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxx 00000
Facsimile No. 000-000-0000
Telephone No. 000-000-0000
9.3 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the Parties and delivered to the other Parties, it being
understood that all Parties need not sign the same counterpart.
9.4 Entire Agreement; Nonassignability; Parties in
Interest. This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, and Schedules (a) constitute the entire agreement among the Parties
with respect to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the Parties with respect to
the subject matter hereof, and shall survive any termination of this Agreement
or the Closing, in accordance with its terms; (b) are not intended to confer
upon any other Person any rights or remedies hereunder; and (c) shall not be
assigned by operation of law or otherwise, except that Buyer may assign its
rights under this Agreement to any of its Subsidiaries, provided that if such
assignee Subsidiary fails to perform any obligation hereunder, Buyer shall
remain liable for full performance thereof.
9.5 Severability. In the event any provision of this
Agreement or the application thereof becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the Parties. The Parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.6 Remedies Cumulative. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a Party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such Party, and the exercise by a Party of any one
remedy will not preclude the exercise of any other remedy.
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9.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania.
9.8 Rules of Construction. The Parties have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or
document.
IN WITNESS WHEREOF, Buyer and the Series A Holders have caused this
Agreement to be executed and delivered as of the date first written above.
XXXXXX MUTUAL INSURANCE
COMPANY
By: /s/ Xxxxxx X. Speaker
_______________________________
Name: Xxxxxx X. Speaker
Title: President and Chief Executive
Officer
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/s/ Xxxxxxx Xxxxxx Xxxxxxx
__________________________________
Xxxxxxx Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx.
__________________________________
Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx.
/s/ Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx.
__________________________________
Xxxxxxx Xxxxxx Xxxxxxxxxx, Xx.
/s/ Xxxxxx Xxxxxxx Xxxxxxxxxx, Xx.
__________________________________
Xxxxxx Xxxxxxx Xxxxxxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxxx
__________________________________
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxx Xxxxxxxxx
__________________________________
Xxxxxxx Xxxxx Xxxxxxxxx
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