XXXXX FINANCIAL
COMMON STOCK
(PAR VALUE $ .01 PER SHARE)
UNDERWRITING AGREEMENT
__________, 1997
Xxxxxxx, Sachs & Co.,
Conning & Company,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
XXXXX Financial, a Delaware corporation (the "Company"), proposes, subject
to the terms and conditions stated herein, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of _____ shares of
common stock, par value $.01 per share ("Stock"), of the Company and, at the
election of the Underwriters, up to _____ additional shares of Stock and the
stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of ______ shares and, at the election of
the Underwriters, up to _____ additional shares of Stock. The aggregate of
_____ shares to be sold by the Company and the Selling Stockholders is herein
called the "Firm Shares" and the aggregate of _____ additional shares to be sold
by the Company and the Selling Stockholders is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares". The merger of Xxxxx Financial, a California corporation and the
predecessor corporation of the Company, with and into the Company is herein
referred to as the "Reincorporation Merger".
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-33159) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to
you for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 6(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was declared
effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, each as amended at the time such
part of the registration statement became effective, is hereinafter
collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act,
is hereinafter called the "Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Xxxxxxx, Sachs & Co. expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto, and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
(iv) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the
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respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been (x) any material addition,
or any development involving a prospective material addition, to the
Company's consolidated reserve for unpaid losses and loss adjustment
expenses, (y) any change in the capital stock of the Company or any of its
subsidiaries or any increase in the short-term or long-term debt of the
Company or any of its subsidiaries (except for the retirement of 1,499
shares of Stock in July 1997) or (z) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations (in the case of financial
position, stockholders' equity and results of operations considered on
either a statutory or generally accepted accounting principles ("GAAP")
basis) of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(v) The Company and its 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 are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held 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 its subsidiaries;
(vi) 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 power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business or
licensed as an insurance company and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification or license, or is subject
to no material liability or disability by reason of the failure to be so
qualified or licensed in any such jurisdiction; and each subsidiary of the
Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and has been duly qualified
for the transaction of business or licensed as an insurance company under
the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification or license,
or is subject to no material liability or disability by reason of the
failure to be so qualified or licensed in any such jurisdiction;
(vii) Each subsidiary of the Company is duly licensed or authorized
as an insurer or insurance agency or third-party administrator in each
jurisdiction where it is required to be so licensed or authorized to
conduct its business as described in the Prospectus, or is subject to no
material liability or disability by reason of the failure to be so licensed
or authorized in any such jurisdiction; the Company and each of its
subsidiaries have made all required filings under applicable insurance
holding company statutes; the Company and each of its subsidiaries have all
other necessary authorizations, approvals, orders, consents, certificates,
permits, registrations or qualifications of and from all insurance
regulatory authorities to conduct its businesses as described in the
Prospectus, or is
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subject to no material liability or disability by reason of the failure to
have such authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications; and none of the
Company or any of its subsidiaries has received any notification from any
insurance regulatory authority to the effect that any additional
authorization, approval, order, consent, license, certificate, permit,
registration or qualification from such insurance regulatory authority is
needed to be obtained by any of the Company or its subsidiaries in any case
where it could be reasonably expected that (x) the Company or its
subsidiaries would in fact be required either to obtain any such additional
authorization, approval, order, consent, license, certificate, permit,
registration or qualification, or cease or otherwise limit writing certain
business and (y) the failure to obtain such authorization, approval, order,
consent, license, certificate, permit, registration or qualification or the
limiting of such business would have a material adverse effect on the
business, financial position or results of operations of the Company and
its subsidiaries;
(viii) Otherwise than as set forth in the Prospectus, each subsidiary
of the Company is in compliance with the requirements of the insurance laws
and regulations of its state of incorporation and the insurance laws and
regulations of other jurisdictions which are applicable to such subsidiary,
and has filed all notices, reports, documents or other information required
to be filed thereunder, except where the failure to so comply or file would
not have a material adverse effect on the Company and its subsidiaries;
(ix) Without limitation of the foregoing, the Company and its
subsidiaries, as applicable, have filed all notices, reports, documents or
other information required to be filed pursuant to, and have obtained all
authorizations, approvals, orders, consents, licenses, certificates,
permits, registrations or qualifications required to be obtained under, and
have otherwise complied with all requirements of, all insurance laws and
regulations applicable to the Company and its subsidiaries in connection
with the Reincorporation Merger and the issuance and sale by the Company of
the Shares and the other transactions herein contemplated, in each case
other than such filings, authorizations, approvals, orders, consents,
licenses, certificates, permits, registrations or qualifications which
(individually or in the aggregate) the failure to make, obtain or comply
with (x) would not have a material adverse effect on the Company and its
subsidiaries and (y) would not affect the validity, performance or
consummation of the transactions contemplated by this Agreement or the
Reincorporation Merger;
(x) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the Stock contained in
the Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims;
(xi) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform
to the description of the Stock contained in the Prospectus;
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(xii) The Reincorporation Merger, the issue and sale of the Shares by
the Company and the compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein contemplated
did not or will not, as applicable, conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or insurance regulatory authority or other
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties; and no consent, approval,
authorization, order, license, certificate, permit, registration or
qualification of or with any such court or insurance regulatory authority
or other governmental agency or body is or was required for the
Reincorporation Merger, the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except (w) those which have been obtained; (x) the registration
under the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters; (y) those relating to the acquisition of 10% or
more of the aggregate number of shares of Stock to be outstanding upon the
consummation of the transactions contemplated by this Agreement by any
person or affiliated persons (other than the purchase and sale of the
shares of Stock by the Underwriters pursuant to this Agreement); or (z)
such consents, approvals, authorizations, orders, licenses, certificates,
permits, registrations or qualifications which (individually or in the
aggregate) the failure to make, obtain or comply with (A) would not have a
material adverse effect on the Company and its subsidiaries and (B) would
not affect the validity, performance or consummation of the transactions
contemplated by this Agreement or the Reincorporation Merger;
(xiii) Neither the Company nor any of its subsidiaries is in violation
of its Certificate or Articles of Incorporation or By-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(xiv) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Xxxxxxx, Sachs & Co. expressly for use therein;
(xv) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries; and, to
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the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xvi) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
and
(xvii) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
(b) Each of the Selling Stockholders severally represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement, and the Election, the Power of Attorney and the Custody
Agreement hereinafter referred to, and for the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder, have been
obtained; and such Selling Stockholder has full right, power and authority
to enter into this Agreement, the Election, the Power-of-Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Election, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which any of the
property or assets of such Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of such Selling Stockholder if such Selling
Stockholder is a corporation, the Partnership Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) Such Selling Stockholder has good and valid title to the Shares
to be sold by such Selling Stockholder hereunder or the Warrant hereinafter
referred to, free and clear of all liens, encumbrances, equities or claims;
immediately prior to each Time of Delivery (as defined in Section 5 hereof)
such Selling Stockholder will have good and valid title to the Shares to be
sold by such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters;
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected
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to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares;
(v) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Stockholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(vi) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(vii) Certificates, in negotiable form representing all of the Shares
to be sold by such Selling Stockholder, or a Warrant Certificate of the
Company (the "Warrant") exercisable for all of the Shares to be sold by
such Selling Stockholder hereunder and an Election to Purchase (the
"Election") designating the number of Shares as to which the Warrant is to
be exercised duly executed by the Selling Stockholder, have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you
(the "Custody Agreement"), duly executed and delivered by such Selling
Stockholder to _____, as custodian (the "Custodian"), and such Selling
Stockholder has duly executed and delivered a Power of Attorney, in the
form heretofore furnished to you (the "Power of Attorney"), appointing the
persons indicated in Schedule II hereto, and each of them, as such Selling
Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority to
execute and deliver this Agreement on behalf of such Selling Stockholder,
to determine the purchase price to be paid by the Underwriters to such
Selling Stockholder as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Stockholder hereunder and
otherwise to act on behalf of such Selling Stockholder in connection with
the transactions contemplated by this Agreement and the Custody Agreement;
and
(viii) The Shares represented by the certificates held in custody for
such Selling Stockholder or the Warrant, the Election and the Shares to be
issued upon the exercise of the Warrant held in custody for such Selling
Stockholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder; the arrangements made by such Selling Stockholder
for such custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable;
the obligations of the Selling Stockholders hereunder shall not be
terminated by operation of law, whether by the death or incapacity of any
individual Selling Stockholder or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the termination of
such estate or trust, or in the case of a partnership or corporation, by
the dissolution of
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such partnership or corporation, or by the occurrence of any other event;
if any individual Selling Stockholder or any such executor or trustee
should die or become incapacitated, or if any such estate or trust should
be terminated, or if any such partnership or corporation should be
dissolved, of if any other such event should occur, before the delivery of
the Shares hereunder, certificates representing the Shares shall be
delivered by or on behalf of such Selling Stockholder in accordance with
the terms and conditions of this Agreement and of the Custody Agreement;
and actions taken by the Attorneys-in-Fact pursuant to the Power of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not
the Custodian, the Attorneys-in-Fact, or any of them, shall have received
notice of such death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and the Selling Stockholders, at a
purchase price per share of $_______, the number of Firm Shares (to be adjusted
by you so as to eliminate fractional shares ) determined by multiplying the
aggregate number of Shares to be sold by the Company and the Selling
Stockholders as set forth opposite their respective names in Schedule II hereto
by a fraction, the number of which is the aggregate number of Firm Shares to be
purchased by such Underwriter as set forth opposite the name of such Underwriter
in Schedule I hereto and the denominator of which is the aggregate number of
Firm Shares by all of the Underwriters from the Company and the Selling
Stockholders hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company and each of the Selling Stockholders agree, severally and not
jointly, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company and each of the
Selling Stockholders, at the purchase price per share set forth in clause (a) of
this Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company and the Selling Stockholders, as and to the extent indicated
in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to _____ Optional
Shares, at the purchase price per share set forth in the paragraph above, for
the sole purpose of covering overallotments in the sale of the Firm Shares.
Any such election to purchase Optional Shares shall be made in proportion to
the maximum number of Optional Shares to be sold by the Company and each
Selling Stockholder as set forth in Schedule II hereto. Any such election
to purchase Optional Shares may be exercised only by written notice from you
to the Company and the Attorneys-in-Fact, given within a period of 30
calendar days after the date of this Agreement, setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by you but in no event earlier than
the First Time of Delivery (as defined in Section 5 hereof) or, unless you
and the Company and the Attorneys-in-Fact otherwise agree in writing, earlier
than two or later than ten business days after the date of such notice.
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3. The Company hereby confirms its engagement of Xxxxxxx, Xxxxx & Co. as,
and Xxxxxxx, Sachs & Co. hereby confirms its agreement with the Company to
render services as, a "qualified independent underwriter" within the meaning of
Rule 2720 of the National Association of Securities Dealers, Inc. (the "NASD")
with respect to the offering and sale of the Shares. Xxxxxxx, Xxxxx & Co., in
its capacity as qualified independent underwriter and not otherwise, is referred
to herein as the "QIU". As compensation for the services of the QIU hereunder,
the Company agrees to pay the QIU $10,000 at the First Time of Delivery.
4. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Xxxxxxx, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of same day funds. The Company will
cause the certificates representing the Shares to be made available for checking
and packaging at least twenty-four hours prior to the Time of Delivery (as
defined below) with respect thereto at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 7:00 a.m., Los Angeles time,
on ________, 1997 or such other time and date as Xxxxxxx, Xxxxx & Co., the
Company and the Selling Stockholders may agree upon in writing, and, with
respect to the Optional Shares, 7:00 a.m., Los Angeles time, on the date
specified by Xxxxxxx, Sachs & Co. in the written notice given by Xxxxxxx, Xxxxx
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Xxxxxxx, Sachs & Co., the Company and the Selling
Stockholders may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 8(m) hereof, will be delivered at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at 4:00
p.m., Los Angeles time, on the New York Business Day next preceding such Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 5, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
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6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 a.m. New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as you may from time to time reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earning statement of the Company and its subsidiaries
10
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of, or file or cause to be filed
with the Commission a registration statement (other than a registration
statement on Form S-8) with respect to, except as provided hereunder any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities or exercise of warrants outstanding as of, the date of
this Agreement), without your prior written consent;
(f) To furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on The Nasdaq
National Market ("Nasdaq"); and
(j) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act.
7. The Company and each of the Selling Stockholders, jointly and
severally, covenant and agree with one another and with the several Underwriters
that (a) the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any
11
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 6(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey (iv) all fees and
expenses in connection with listing the Shares on the Nasdaq; (v) the filing
fees incident to, and the fees and disbursements of counsel for the Underwriters
in connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; (viii) any fees and expenses of one counsel for the Selling
Stockholders, (ix) fees and expenses of the Attorneys-in-Fact and the Custodian,
and (x) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section; and (b) such Selling Stockholder will pay or cause to be paid all costs
and expenses incident to the performance of the Selling Stockholders'
obligations hereunder which are not otherwise specifically provided for in this
Section, including all expenses and taxes incident to the sale and delivery of
the Shares to be sold by the Selling Stockholders to the Underwriters hereunder.
In connection with the preceding sentence, Xxxxxxx, Sachs & Co. agrees to pay
New York State stock transfer tax, and the Selling Stockholders agree to
reimburse Xxxxxxx, Xxxxx & Co. for associated carrying costs if such tax payment
is not rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the
Selling Stockholders shall not be required to pay or to reimburse the Company
for, the cost of any other matters not directly relating to the sale and
purchase of the Shares pursuant to this Agreement, and that, except as provided
in this Section, and Sections 10 and 13 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that each of the Company, and the
Selling Stockholder shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 6(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
12
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such opinion or opinions (a draft of each such opinion is
attached as Annex II(a) hereto), dated such Time of Delivery, with respect
to the incorporation of the Company, the validity of the Shares being
delivered at such Time of Delivery, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Company and the
Selling Stockholders, shall have furnished to you their written opinion (a
draft of each such opinion is attached as Annex II(b) hereto), dated such
Time of Delivery, in form and substance satisfactory to you, 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 power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) This Agreement has been duly authorized, executed and
delivered by the Company;
(iv) An Election, a Power-of-Attorney and a Custody
Agreement have been duly authorized, executed and delivered by each of
the Selling Stockholders and constitute valid and binding agreements
of each of the Selling Stockholders in accordance with their terms;
(v) This Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders; and the
sale of the Shares to be sold by each of the Selling Stockholders
hereunder and the compliance by each of the Selling Stockholder with
all of the provisions of this Agreement, the Election, the
Power-of-Attorney and the Custody Agreement and the consummation of
the transactions herein and therein contemplated will not result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Selling Stockholders if such Selling Stockholder is a
corporation or the Partnership Agreement if such Selling Stockholder
is a partnership;
(vi) The issue and sale of the Shares being delivered at
such Time of Delivery by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated (including consummation of the
Reincorporation Merger) will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is
13
a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws of
the Company or any statute or any order, rule or regulation known to
such counsel of any court or regulatory authority or other
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties (other than those
made or established by any insurance official or regulatory authority
as to which no opinion need be given), in each case other than such
conflicts, breaches, violations or defaults which, individually or in
the aggregate, (x) would not have a material adverse effect on the
Company and its subsidiaries and (y) would not affect the validity,
performance or consummation of the transactions contemplated by this
Agreement or the Reincorporation Merger, nor will such actions result
in any violation of the provisions of the Certificate of Incorporation
or By-laws of the Company (such counsel being entitled to rely in
respect of the opinion in this clause upon a certificate of an officer
of the Company in respect of matters of fact, provided that such
counsel shall state that both you and they are justified in relying
upon such certificate);
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body (other than any insurance regulatory
authority, as to which no opinion need be given) is required for the
issue and sale of the Shares or the consummation by the Company or
each of the Selling Stockholders of the transactions contemplated by
this Agreement, except the registration under the Act of the Shares,
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the Underwriters;
(viii) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound, in each case other than such violations or defaults which,
individually or in the aggregate, (x) would not have a material
adverse effect on the Company and its subsidiaries and (y) would not
affect the validity, performance or consummation of the transactions
contemplated by this Agreement or the Reincorporation Merger, nor will
such actions result in any violation of the provisions of the
Certificate of Incorporation or By-Laws of the Company;
(ix) Immediately prior to the First Time of Delivery, each
of the Selling Stockholders had good and valid title to the Shares to
be sold at the First Time of Delivery by such Selling Stockholder
under this Agreement, free and clear of all liens, encumbrances,
equities or claims, and full right, power and authority to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder (such counsel being entitled to rely in respect
of the opinion in this clause without independent investigation upon a
certificate of such Selling Stockholder in respect of matters of fact
as to the ownership of, and liens, encumbrances, equities or claims on
the Shares sold by such Selling Stockholder);
14
(x) Good and valid title to such Shares, free and clear of
all liens, encumbrances, equities or claims, has been transferred to
each of the several Underwriters who have purchased such Shares in
good faith and without notice of any such lien, encumbrance, equity or
claim or any other adverse claim within the meaning of the Uniform
Commercial Code;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock, and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and
fair;
(xii) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need not comment)
comply as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder; and
Such counsel shall also state that although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (xi) of this Section 8(c), they
have no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need not comment) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need not comment) contained an 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 or that, as of such Time of Delivery,
either the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need not comment) contains an 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; and they do not know of any amendment to
the Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required;
(d) Xxxxxxx X. Xxxxxx, Senior Vice President and General Counsel of
the Company, shall have furnished to you his written opinion (a draft of
such opinion is attached as Annex II(c) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
15
(i) Each of Xxxxx Insurance Company ("PICO"), Xxxxx
Assurance Company, Pan American Underwriters, Inc., Pan American
Underwriters Insurance Agents & Brokers, Inc., Pan Pacific Benefit
Administrators, Inc. and Xxxxx Trading Company Insurance Agents &
Brokers, Inc. has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of each
such subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable, and (except for
directors' qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims
(such counsel being entitled to advise you that his opinion in this
clause with respect to matters pertaining to state laws other than
those of California is based upon examinations of applicable statutes
and the published rules and regulations, if any, of governmental
authorities administering such laws, as reported in the unofficial
compilations thereof available to him, and such counsel has not
obtained any special ruling with regard to such matters from any
governmental authority);
(ii) The Company has been duly qualified as a foreign
corporation for the transaction of business or is licensed as an
insurance company and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification or license or is subject
to no material liability or disability by reason of failure to be so
qualified or licensed in any such jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
shall state that he believes that both you and he are justified in
relying upon such opinions and certificates);
(iii) The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held 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 its
subsidiaries (in giving the opinion in this clause, such counsel may
state that no examination of record titles for the purpose of such
opinion has been made, and that he is relying upon a general review of
the titles of the Company and its subsidiaries, upon opinions of local
counsel and abstracts, reports and policies of title companies
rendered or issued at or subsequent to the time of acquisition of such
property by the Company or its subsidiaries, upon opinions of counsel
to the lessors of such property and, in respect to matters of fact,
upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that he believes that both you
and he are justified in relying upon such opinions, abstracts,
reports, policies and certificates);
(iv) Each subsidiary of the Company is duly licensed or
authorized as an insurer or insurance agent or third-party
administrator in each jurisdiction where it is required
16
to be so licensed or authorized to conduct its business as described
in the Prospectus, or is subject to no material liability or
disability by reason of the failure to be so licensed or authorized in
any such jurisdiction; the Company and each of its subsidiaries have
made all required filings under applicable insurance holding company
statutes; each of the Company and each of its subsidiaries has all
other necessary authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications of and from all
insurance regulatory authorities to conduct their respective
businesses as described in the Prospectus, or is subject to no
material liability or disability by reason of the failure to have such
authorizations, approvals, orders, consents, licenses, certificates,
permits, registrations or qualifications; and to the best of such
counsel's knowledge, none of the Company or any of its subsidiaries
has received any notification from any insurance regulatory authority
to the effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or qualification
from such insurance regulatory authority is needed to be obtained by
any of the Company or any of its subsidiaries in any case where it
could be reasonably expected that (x) the Company or any of its
subsidiaries would in fact be required either to obtain any such
additional authorization, approval, order, consent, license,
certificate, permit, registration or qualification or cease or
otherwise limit writing certain business and (y) the failure to obtain
such authorization, approval, order, consent, license, certificate,
permit, registration or qualification or limiting such business would
have a material adverse effect on the business, financial position or
results of operations of the Company and its subsidiaries;
(v) To the best of such counsel's knowledge, each
subsidiary of the Company is in compliance with the requirements of
the insurance laws and regulations of its state of incorporation and
the insurance laws and regulations of other jurisdictions which are
applicable to such subsidiary, and has filed all notices, reports,
documents or other information required to be filed thereunder, or is
subject to no material liability or disability by reason of the
failure to so comply or file (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that he believes that
both you and he are justified in relying upon such opinions and
certificates);
(vi) All statements made in the Prospectus with respect to
existing and proposed federal and state statutes, regulations and
rules, and, to the best of such counsel's knowledge, with respect to
regulatory policies and practices, fairly and accurately present the
information set forth therein in all material respects and the
statements in the Prospectus under the caption "Management -- Employee
Stock Ownership Plan", insofar as they purport to describe the
provisions of the laws and documents referred to therein and the XXXXX
Financial and Subsidiaries Employee Stock Ownership Plan (the "ESOP")
and the XXXXX Financial and Subsidiaries Employee Stock Ownership
Trust, fairly and accurately present the information set forth therein
in all material respects (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of regulatory
counsel, provided that such counsel shall state that he believes that
both you and he are justified in relying upon such opinions);
17
(vii) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(viii) The issue and sale of the Shares being delivered at
such Time of Delivery by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation of
the Reincorporation Merger and the other transactions herein
contemplated did not or will not, as applicable, conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, and such action did not or will not, as applicable, result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation
known to such counsel of any court or insurance regulatory authority
or other governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties, in each
case other than such conflicts, breaches, violations or defaults
which, individually or in the aggregate, (x) would not have a material
adverse effect on the Company and its subsidiaries and (y) would not
affect the validity, performance or consummation of the transactions
contemplated by this Agreement or the Reincorporation Merger, nor will
such actions result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company; and
(ix) The Company and its subsidiaries, as applicable, have
filed all notices, reports, documents or other information required to
be filed pursuant to, and have obtained all authorizations, approvals,
orders, consents, licenses, certificates, permits, registrations or
qualifications required to be obtained by the Company and its
subsidiaries under, and have otherwise complied with all requirements
of, all insurance laws and regulations applicable to the Company and
its subsidiaries in connection with the Reincorporation Merger and the
issuance and sale by the Company of the Shares; and, except as have
been obtained pursuant to the foregoing clause, no filing,
authorization, approval, order, consent, license, certificate, permit,
registration or qualification of or with any court, insurance
regulatory agency or other governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, is required for the issuance and sale by the Company
of the Shares, the Reincorporation Merger or the consummation of the
other transactions contemplated by this Agreement, except (x) the
registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws (other than state
insurance securities laws of the state of California) in connection
with the
18
purchase and distribution of the Shares by the Underwriters; (y) those
relating to the acquisition of 10% or more of the aggregate number of
shares of Stock to be outstanding upon the consummation of the
transactions contemplated by this Agreement by any person or
affiliated persons (other than the purchase and sale of the shares of
Stock by the Underwriters pursuant to this Agreement) or (z) such
filings, authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications which
(individually or in the aggregate) the failure to make, obtain or
comply with (A) would not have a material adverse effect on the
Company and its subsidiaries and (B) would not affect the validity,
performance or consummation of the transactions contemplated by this
Agreement or the Reincorporation Merger.
Such counsel shall also state that although he does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (vi) of this Section 8(d), he has
no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need not comment) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need not comment) contained an 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 or that, as of such Time of Delivery,
either the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need not comment) contains an 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; and he does not know of any amendment to
the Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required;
(e) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date
of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
KPMG Peat Marwick LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto (the
executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or
19
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been
(x) any addition, or any development involving a prospective addition, to
the Company's consolidated reserve for unpaid losses and loss adjustment
expenses, (y) any change in the capital stock of the Company or any of its
subsidiaries or any increase in short-term or long-term debt of the Company
or any of its subsidiaries or (z) any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations (in the
case of financial position, stockholders' equity and results of operations
considered on either a statutory or GAAP basis) of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of the Representatives so material and adverse
as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded PICO's financial strength or claims paying
ability by A.M. Best Company and (ii) A.M. Best Company shall not have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of PICO's financial strength or claims
paying ability;
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on Nasdaq; (ii) a
suspension or material limitation in trading in the Company's securities on
Nasdaq; (iii) a general moratorium on commercial banking activities
declared by Federal or New York or California State authorities; or (iv)
the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this Clause (iv) in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been
duly admitted for quotation on Nasdaq;
(j) On or prior to the date hereof, each executive officer and each
director of the Company, the ESOP and each person or entity set forth in
Schedule III hereto shall have furnished to you his or its executed written
agreement, in form and substance satisfactory to you, that, during the
period beginning from the date hereof and continuing to and including the
date 180 days after the date of the Prospectus, not to offer, sell,
contract to sell or otherwise dispose of, or file or cause to be filed with
the Commission a registration statement (other than a registration
statement on Form S-8) with respect to, shares of Stock or any securities
of the Company that are substantially similar to the Shares, including but
not limited to any securities convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities, without your
20
prior written consent, except that the ESOP may distribute shares of Stock
to participants in the ESOP upon termination of such participants
employment with the Company;
(k) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of Prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(l) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (f) of this Section and as to such other matters as
you may reasonably request.
9. (a) The Company will indemnify and hold harmless Xxxxxxx, Xxxxx &
Co., in its capacity as QIU, against any losses, claims, damages or liabilities,
joint or several, to which the QIU may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment 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 will reimburse the QIU for any legal
or other expenses reasonably incurred by the QIU in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall 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 an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein;
(b) Promptly after receipt by the QIU under subsection (a) above of notice
of the commencement of any action, the QIU shall, if a claim in respect thereof
is to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to the QIU otherwise than under such subjection. In case any such
action shall be brought against the QIU and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to the QIU (who shall not, except with the consent of the
QIU, be counsel to the indemnifying party), and, after notice from the
indemnifying party to the QIU of its election so to assume the defense thereof,
the indemnifying party shall not be liable to the QIU under such subsection for
any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by the QIU, in connection with the defense thereof other
than reasonable costs of investigation. The indemnifying party shall not,
without the written consent of the QIU, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the QIU is an actual or potential party
to
21
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the QIU from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of QIU.
(c) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless Xxxxxxx, Xxxxx & Co., in its capacity as
QIU, under subsection (a) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then the
indemnifying party shall contribute to the amount paid or payable by the QIU as
a result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the QIU on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the QIU failed to
give the notice required under subsection (b) above, then the Company shall
contribute to such amount paid or payable by the QIU 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 the QIU on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the QIU on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company, as set forth in the table on the cover page of the Prospectus,
bear to the fee payable to the QIU pursuant to Section 3 hereof. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the QIU on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the QIU agree that it would not be just
and equitable if contributions pursuant to this subsection (c) were determined
by PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(c). The amount paid or payable by the QIU as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (c) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. 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.
(d) The obligations of the Company under this Section 9 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the QIU
within the meaning of the Act.
10. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment 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 will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED,
22
HOWEVER, that the Company shall 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 an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Xxxxxxx,
Sachs & Co. expressly for use therein.
(b) Each Selling Stockholder, severally and not jointly, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment 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, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use therein;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Each Underwriter will indemnify and hold harmless the Company and each
of the Selling Stockholders against any losses, claims, damages or liabilities
to which the Company or the Selling Stockholders may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxxx, Xxxxx & Co.
expressly for use therein; and will reimburse the Company and each of the
Selling Stockholders for any legal or other expenses reasonably incurred by the
Company or such Selling Stockholder in connection with investigating or
defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified
23
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(e) If the indemnification provided for in this Section 10 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Stockholders on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, each of the Selling
Stockholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (e) were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (e). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection
(e), no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages
24
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section 10 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 10 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholders within the meaning of
the Act.
11. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholders shall have the right to postpone such Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains
25
unpurchased exceeds one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, or if the Company and the Selling
Stockholders shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Stockholders, except for the expenses to be borne by the Company and the
Selling Stockholders and the Underwriters as provided in Section 7 hereof and
the indemnity and contribution agreements in Section 10 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any Selling Stockholder, or any officer or
director or controlling person of the Company, or any controlling person of any
Selling Stockholder, and shall survive delivery of and payment for the Shares.
Anything herein to the contrary notwithstanding, the indemnity agreement of
the Company in subsection (a) of Section 10 hereof, the representations and
warranties in subsections (b) and (c) of Section 1 hereof and any
representation or warranty as to the accuracy of the Registration Statement or
the Prospectus contained in any certificate furnished by the Company pursuant to
Section 8 hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the Act,
shall not extend to the extent of any interest therein of a controlling person
or partner of an Underwriter who is a director, officer or controlling person of
the Company when the Registration Statement has become effective, except in each
case to the extent that an interest of such character shall have been determined
by a court of appropriate jurisdiction as not against public policy as expressed
in the Act. Unless in the opinion of counsel for the Company the matter has
been settled by controlling precedent, the Company will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question of whether such interest is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
13. If this Agreement shall be terminated pursuant to Section 11 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 7 and 10 hereof;
but, if for any other reason, any Shares are not delivered by or on behalf of
the Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholders shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 7 and 10
hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf
26
of you as the representatives; and in all dealings with any Selling Stockholder
hereunder, you and the Company shall be entitled to rely upon any statement,
request, notice or agreement on behalf of the Selling Stockholders made or given
by any or all of the Attorneys-in-Fact for the Selling Stockholders.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; if to any Selling Stockholders shall be delivered or sent by mail,
telex or facsimile transmission to counsel for the Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 10(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholders by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Stockholders and, to the
extent provided in Sections 10 and 12 hereof, the officers and directors of the
Company and each person who controls the Company, any Selling Stockholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
27
If the foregoing is in accordance with your understanding, please sign and
return to us eight counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and each of the Selling Stockholders. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholders for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholders pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
XXXXX Financial
By:
------------------------------
Name:
Title:
Prudential Securities Incorporated
[Other Selling Stockholders]
By:
------------------------------
Name:
As Attorney-in-Fact acting on behalf
of the Selling Stockholders
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
Conning & Company
By:
-------------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
28
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ------------------
Xxxxxxx, Sachs & Co. . . . . . . . . .
Conning & Company . . . . . . . . . . .
Total . . . . . . . . . . . .
-------------- -----------------
-------------- -----------------
-------------- -----------------
29
SCHEDULE II
Number of
Optional Shares
Total Number of to be Sold if
Firm Shares Maximum Option
Underwriter to be Sold Exercised
----------- --------------- ---------------
The Company . . . . . . . . . . . . . . .
Prudential Securities Incorporated(*) . . 54,902 -----
[Other Selling Stockholders]
-------------- --------------
Total . . . . . . . . . . . . . .
-------------- --------------
-------------- --------------
---------------
(*) Such Selling Stockholders are represented by Xxxxxx, Xxxx & Xxxxxxxx LLP,
000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and has appointed
_____ and _____, and each of them, as the Attorneys-in-Fact, for each
Selling Stockholder.
30
SCHEDULE III
Conning Insurance Capital Limited Partnership II
Conning Insurance Capital International Partners II
Conning Insurance Capital Limited Partnership III
Conning Insurance Capital International Partners III, L.P.
Conning Corporation
RFE Investment Partners IV, L.P.
Saugatuck Capital Company
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ANNEX I
Pursuant to Section 8(g) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the
"Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which have been
separately furnished to the Representatives and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
rules and regulations, nothing came to their attention that cause them to
believe that the unaudited condensed consolidated financial statements do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
agrees with the corresponding amounts (after restatements where applicable)
in the Company's audited consolidated financial statements for such five
fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
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(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated short-term or long-term debt or consolidated reserve for
unpaid losses and loss adjustment expenses, or any decreases in
consolidated fixed income securities available for sale, consolidated
total investments or stockholders' equity, or any decrease in the
unassigned funds (surplus) or statutory capital of Xxxxx Insurance
Company, or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with amounts
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shown in the latest balance sheet included in the Prospectus, except
in each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
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