Up to 6,261,111 Shares
XXXXXX INSURANCE GROUP, INC
(a Pennsylvania corporation)
Common Stock
(no par value per share)
FORM OF AGENCY AGREEMENT
August ____, 0000
XXXXXXX X'XXXXX & PARTNERS, L.P.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxx Insurance Group, Inc., a Pennsylvania corporation (the
"Company"), and Xxxxxx Mutual Insurance Company, a Pennsylvania mutual insurance
company ("Xxxxxx Mutual"), hereby confirm their agreement with Sandler X'Xxxxx &
Partners, L.P. ("Sandler X'Xxxxx" or the "Agent") with respect to the offer and
sale by the Company of up to 6,261,111 shares of the Company's Common Stock, no
par value (the "Common Stock"). The shares of Common Stock to be sold by the
Company are hereinafter called the "Securities."
The Company is the proposed holding company for Xxxxxx Mutual and its
subsidiaries, Queenstown Holding Company ("QHC"), the holding company for Xxxxxx
Insurance Company of New Jersey, Inc. ("MIC"), and BICUS Services Corporation
("BICUS"), a provider of management services to Xxxxxx Mutual. Xxxxxx Mutual
also owns a controlling interest in Franklin Holding Company, Inc. ("Franklin
Holding"), the holding company for Franklin Insurance Company ("FIC"). Xxxxxx
Mutual, QHC, MIC, BICUS, Franklin Holding and FIC are referred to collectively
herein as the "Xxxxxx Companies". The Securities are being offered in connection
with the conversion of Xxxxxx Mutual from mutual to stock form (the
"Conversion") and the simultaneous acquisition of the capital stock of Xxxxxx
Mutual by the Company pursuant to a plan of conversion which has been adopted by
the Board of Directors of Xxxxxx Mutual (the "Plan").
The Securities to be issued in the Conversion will be offered by the
Company at $10.00 per share (the "Purchase Price") in a subscription offering
(the "Subscription Offering") pursuant to nontransferable subscription rights in
the following order of priority: (i) named insureds under policies of insurance
issued by Xxxxxx Mutual and in force as of the close of business on December 13,
2002 ("Eligible Policyholders"), and (ii) directors, officers and employees of
the Xxxxxx Mutual. Subscription rights in any category will be subordinated to
subscription rights in a prior category.
Subject to the prior rights of holders of subscription rights, any
Securities not subscribed for in the Subscription Offering may be offered to
members of the general public at the Purchase Price in a direct community
offering (the "Community Offering," and together with the Subscription Offering,
as each may be extended, the "Subscription and Community Offering") to be
commenced concurrently with the Subscription Offering. Preference will be given
in the Community Offering to (i) natural persons and trusts of natural persons
who are permanent residents of New Jersey and Pennsylvania, (ii) principals of
Eligible Policyholders in the case of an Eligible Policyholder that is not a
natural person, (iii) licensed insurance agencies that have been appointed by
Xxxxxx Mutual to market and distribute policies of insurance, and their owners,
(iv) named insureds under policies of insurance issued by Xxxxxx Mutual after
December 13, 2002, and (v) providers of goods and services to Xxxxxx Mutual.
In addition, a tax-qualified employee stock ownership plan of the
Company (the "ESOP") will have the right to purchase shares in an amount up to
10% of the shares sold in the Conversion (the "ESOP Offering").
It is currently anticipated by the Company and Xxxxxx Mutual that any
Securities not subscribed for in the Subscription and Community Offering will be
offered in a syndicated community offering (the "Syndicated Community
Offering"). The Subscription and Community Offering, the ESOP Offering and the
Syndicated Community Offering are hereinafter referred to collectively as the
"Offerings."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-104897), including a
related prospectus, for the registration of the Securities under the Securities
Act of 1933, as amended (the "Securities Act"), has filed such amendments
thereto and such amended prospectuses as may have been required to the date
hereof by the Commission in order to declare such registration statement
effective, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended to date, if applicable, and as from time to
time amended or supplemented hereafter) and the prospectuses constituting a part
thereof (including in each case all documents incorporated or deemed to be
incorporated by reference therein and the information, if any, deemed to be a
part thereof pursuant to the rules and regulations of the Commission under the
Securities Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the "Securities Act Regulations")), are hereinafter
referred to as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be used by the Company in connection
with the Subscription and Community Offering or the Syndicated Community
Offering which differs from the Prospectus on file at the Commission at the time
the
Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Agent for such
use.
In addition to and separate from the Offerings, the Company is also
offering shares of its Common Stock to Franklin Mutual Insurance Company and the
shareholders of Franklin Holding pursuant to rights of such persons to acquire
Common Stock as described in the Prospectus (the "Franklin Offerings"). The
Agent is not involved in or responsible for any matter involving the Franklin
Offerings and is not receiving any compensation in connection with the Franklin
Offerings.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to Xxxxxx Mutual, the Company, the Subscription and Community
Offering, and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and Xxxxxx Mutual jointly and severally represent and
warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the Commission, no stop order has been issued with respect thereto, no
proceedings therefor have been initiated and the Commission has not
threatened the Company or Xxxxxx Mutual with the initiation of such
proceedings. At the time the Registration Statement became effective
and at the Closing Time referred to in Section 2 hereof, the
Registration Statement complied and will comply in all material
respects with the requirements of the Securities Act and the Securities
Act Regulations and did not and will 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 not misleading. At
the date hereof the Prospectus does not and at the Closing Time
referred to in Section 2 hereof, will not include an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
with respect to the Agent and the services to be provided by the Agent
furnished to the Company in writing by the Agent expressly for use in
the Registration Statement or Prospectus (the "Agent Information,"
which the Company and Xxxxxx Mutual acknowledge appears only in the
sixth sentence of the second paragraph in the section of the Prospectus
captioned "Market For The Common Stock" and the first four paragraphs
of the section of the Prospectus captioned "The Conversion--Marketing
and Underwriting Arrangements").
(ii) Pursuant to the Pennsylvania Insurance Company
Mutual-to-Stock Conversion Act (the "Conversion Act"), Xxxxxx Mutual
has filed with the Pennsylvania Insurance Department (the "Department")
an application requesting approval of the Plan, and has filed such
amendments thereto and supplementary materials as may have been
required to the date hereof (such application, as amended to date, if
applicable, and as from time to time amended or supplemented hereafter,
is hereinafter referred to as the "Conversion Application"), including
copies of Xxxxxx Mutual's Notice and Proxy Statement relating to the
Conversion (the "Proxy Statement"). The Department has, by written
order dated July 8, 2003, approved the Plan, such approval remains in
full force and effect and no order has been issued by the Department
suspending or revoking such approval and no proceedings therefor have
been initiated and the Department has not threatened the Company or
Xxxxxx Mutual with the initiation of such proceedings. At the date of
such approval and at the Closing Time referred to in Section 2, the
Plan complied and will comply in all material respects with the
applicable provisions of the Conversion Act.
(iii) At the time of their use, the Proxy Statement and any
other proxy solicitation materials will comply in all material respects
with the applicable provisions of the Conversion Act and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Company and Xxxxxx Mutual will promptly file the Prospectus and any
supplemental sales literature with the Commission and the Department.
The Prospectus and all supplemental sales literature, as of the date
the Registration Statement became effective and at the Closing Time
referred to in Section 2, will have received all required
authorizations for use in final form.
(iv) Neither the Commission nor the Department has, by order
or otherwise, prevented or suspended the use of the Proxy Statement,
Prospectus or any supplemental sales literature authorized by the
Company or Xxxxxx Mutual for use in connection with the Offerings, and
no action by or before any such governmental entity to prevent or
suspend the use of any such documents is pending, and no such
governmental entity has threatened the Company or Xxxxxx Mutual with
the initiation of such action.
(v) At the Closing Time referred to in Section 2, the Company
and Xxxxxx Mutual will have completed the conditions precedent to the
Conversion in accordance with the Plan, the Conversion Act and all
other applicable laws, regulations, decisions and orders, including all
material terms, conditions, requirements and provisions precedent to
the Conversion imposed upon the Company or Xxxxxx Mutual by any
regulatory authority, other than those which the regulatory authority
permits to be completed after the Conversion.
(vi) Xxxxxxx Financial Group, LLC ("Xxxxxxx"), which prepared
the valuation of Xxxxxx Mutual as part of the Conversion, has advised
the Company and Xxxxxx Mutual in writing that it believes it is
independent of Xxxxxx Mutual. Xxxxxx Mutual believes that Xxxxxxx is a
"qualified expert" within the meaning of the Conversion Act.
(vii) The accountants who certified the consolidated financial
statements and supporting schedules of Xxxxxx Mutual included in the
Registration Statement have advised the Company and Xxxxxx Mutual in
writing that they are independent public accountants with respect to
the Company within the meaning of the Code of Ethics of the
American Institute of Certified Public Accountants and the Securities
Act Regulations and such accountants are in compliance with the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act.
(viii) The only direct and indirect subsidiaries of Xxxxxx
Mutual are QHC, MIC, BICUS, Franklin Holding and FIC. Upon consummation
of the Conversion, the Xxxxxx Companies will be the only subsidiaries
of the Company.
(ix) The consolidated financial statements and the related
notes thereto included in the Registration Statement and the Prospectus
present fairly the financial position of Xxxxxx Mutual and its
consolidated subsidiaries at the dates indicated and the related
statements of operations, changes in surplus, and cash flows for the
periods specified, and comply as to form in all material respects with
the applicable accounting requirements of the Securities Act
Regulations; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the supporting schedules and tables included in the Registration
Statement present fairly the information required to be stated therein.
The pro forma consolidated financial data of the Company included in
the Registration Statement have been prepared and compiled in all
material respects on the pro forma basis described therein, and the pro
forma adjustments have in all material respects been properly and
fairly applied to the historical combined financial statements of the
Xxxxxx Companies for the periods to which they relate. The financial
information set forth in the Prospectus under "Selected Consolidated
Financial Data" presents fairly, on the basis stated in the Prospectus,
the information set forth therein. Except as disclosed in the
Prospectus, neither the Company nor any of the Xxxxxx Companies has any
liability of any kind, whether actual, contingent or otherwise that
would be required to be disclosed in the Prospectus.
(x) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein (A) there has been no material adverse change
in the financial condition, results of operations or business affairs
of the Company and the Xxxxxx Companies considered as one enterprise,
whether or not arising in the ordinary course of business, and (B)
except for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company
or any of the Xxxxxx Companies which are material with respect to the
Company and the Xxxxxx Companies, considered as one enterprise.
(xi) The Company and each of the Xxxxxx Companies has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus;
and the Company and each of the Xxxxxx Companies is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of
operations or business affairs of the Company and the Xxxxxx Companies,
considered as one enterprise. Xxxxxx Mutual has all
requisite power and authority to carry on an insurance business
pursuant to and to the extent of the certificates of authority issued
under the laws of the Commonwealth of Pennsylvania and State of New
Jersey. MIC and FIC have all requisite power and authority to carry on
an insurance business pursuant to and to the extent of the certificate
of authority issued under the laws of the State of New Jersey and the
Commonwealth of Pennsylvania, respectively. Except as disclosed in the
Prospectus, the authority of each of Xxxxxx Mutual, MIC and FIC to
write the classes and lines of insurance authorized by such licenses,
certificates, permits and other authorizations and described in the
Prospectus is unrestricted and neither the Company nor any of the
Xxxxxx Companies is a party to any agreement, formal or informal, with
any regulatory official or other person limiting the ability of any of
the Xxxxxx Companies from making full use of the licenses,
certificates, permits and other authorizations issued to it or
requiring the Company or any of the Xxxxxx Companies to comply with
regulatory standards or procedures or requirements different from those
applicable to companies with comparable or similar licenses,
certificates, permits and other authorizations, except where such
restriction, limitation or requirement would not have a material
adverse effect on the financial condition, results of operations or
business affairs of the Company and the Xxxxxx Companies, considered as
one enterprise.
(xii) The Company and each of the Xxxxxx Companies conducts
its business in compliance in all material respects with applicable
federal, state, local and foreign laws and regulations, except where
the failure to be in compliance would not have a material adverse
effect on the financial condition, results of operations or business
affairs of the Company and the Xxxxxx Companies, considered as one
enterprise. The Company and each of the Xxxxxx Companies has obtained
all licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses or required for
the conduct of their respective businesses as contemplated by the
Conversion Application, except where the failure to obtain such
licenses, permits or other governmental authorizations would not have a
material adverse effect on the financial condition, results of
operations or business affairs of the Company and the Xxxxxx Companies
considered as one enterprise; all such licenses, permits and other
governmental authorizations are in full force and effect and the
Company and each of the Xxxxxx Companies is in all material respects in
compliance therewith; neither the Company nor any of the Xxxxxx
Companies has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
material adverse effect on the financial condition, results of
operations or business affairs of the Company and the Xxxxxx Companies,
considered as one enterprise.
(xiii) Upon consummation of the Conversion and the Franklin
Offerings, the authorized, issued and outstanding capital stock of the
Company will be within the ranges set forth in the Prospectus under
"Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus); no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Time referred to in Section 2; at the
time of Conversion,
the Securities will have been duly authorized for issuance and, when
issued and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan and
stated on the cover page of the Prospectus, will be duly and validly
issued and fully paid and non-assessable; the terms and provisions of
the Common Stock and the capital stock of the Company conform to all
statements relating thereto contained in the Prospectus; the
certificates representing the shares of Common Stock conform to the
requirements of applicable law and regulations; and the issuance of the
Securities is not subject to preemptive or other similar rights. There
are no options, agreements, contracts or other rights in existence to
acquire from the Company any shares of Common Stock, except as set
forth in the Prospectus.
(xiv) Upon consummation of the Conversion, the authorized
capital stock of Xxxxxx Mutual will be 2,100,000 shares of common
stock, par value $1.00 per share (the "Xxxxxx Common Stock"), and no
shares of Xxxxxx Common Stock have been or will be issued prior to the
Closing time referred to in Section 2. The shares of Xxxxxx Common
Stock to be issued to the Company will have been duly authorized for
issuance and, when issued and delivered by Xxxxxx Mutual pursuant to
the Plan against payment of the consideration calculated as set forth
in the Plan and as described in the Prospectus, will be duly and
validly issued and fully paid and nonassessable, and all such Xxxxxx
Common Stock will be owned beneficially and of record by the Company
free and clear of any security interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim; the certificates representing
the shares of Xxxxxx Common Stock will conform with the requirements of
applicable laws and regulations; and the issuance of Xxxxxx Common
Stock is not subject to preemptive or similar rights, and except for
the rights of the purchasers of Shares in the Franklin Offerings, there
are no other warrants, options or rights of any kind to acquire
additional shares of Xxxxxx Common Stock.
(xv) All of the issued and outstanding capital stock of QHC,
MIC and BICUS, and 49% of the issued and outstanding capital stock of
Franklin Holding, has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by Xxxxxx Mutual, directly or
indirectly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or legal or equitable claim. Upon the occurrence of
certain events as described in the Prospectus, Xxxxxx Mutual has the
right to acquire the remaining 51% of the issued and outstanding
capital stock of Franking Holding that it does not own. All of the
issued and outstanding capital stock of FIC has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by
Franklin Holding free and clear of any security interest, mortgage,
pledge, lien, encumbrance or legal or equitable claim.
(xvi) The Company and Xxxxxx Mutual have the corporate power
to enter into and to perform this Agreement and have taken all
corporate action necessary for them to execute, deliver and perform
this Agreement, and this Agreement has been duly executed and delivered
by, and is the valid and binding agreement of, the Company and Xxxxxx
Mutual, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xvii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
and prior to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of the Company or any of the Xxxxxx
Companies will have (A) issued any securities or incurred any liability
or obligation, direct or contingent, or borrowed money, except
liabilities, obligations and borrowings in the ordinary course of
business consistent with past practices or as indicated in the
Prospectus, or (B) entered into any transaction or series of
transactions which is material in light of the business of the Company
and the Xxxxxx Companies considered as one enterprise.
(xviii) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Securities that has
not been obtained and a copy of which has been delivered to the Agent,
except as may be required under the securities laws of various
jurisdictions.
(xix) Neither the Company nor any of the Xxxxxx Companies is
in violation of its certificate of incorporation, organization
certificate, articles of incorporation or charter, as the case may be,
or bylaws (and Xxxxxx Mutual will not be in violation of its charter or
bylaws upon consummation of the Conversion); and neither the Company
nor any of the Xxxxxx Companies is in default (nor has any event
occurred which, with notice or lapse of time or both, would constitute
a default) in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any of the Xxxxxx Companies is a party or by which it or any
of them may be bound, or to which any of the property or assets of the
Company or any of the Xxxxxx Companies is subject, except for such
defaults that would not, individually or in the aggregate, have a
material adverse effect on the financial condition, results of
operations or business of the Company and the Xxxxxx Companies
considered as one enterprise.
(xx) The consummation of the Conversion, execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated herein do not and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Xxxxxx Companies pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of the Xxxxxx Companies is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, except for such defaults that would not, individually or in
the aggregate, have a material adverse effect on the financial
condition, results of operations or business affairs of the Company and
the Xxxxxx Companies considered as one enterprise; nor will such action
result in any violation of the provisions of certificate of
incorporation, organization certificate, articles of incorporation or
charter or by-laws of the Company or any of the Xxxxxx Companies, or
any applicable law, administrative regulation or administrative or
court decree.
(xxi) No labor dispute with the employees of the Company or
any of the Xxxxxx Companies exists or, to the knowledge of the Company
or Xxxxxx Mutual, is imminent or threatened; and the Company and Xxxxxx
Mutual are not aware of any existing or threatened labor disturbance by
the employees of any of its principal suppliers or contractors which
might be expected to result in any material adverse change in the
financial condition, results of operations or business affairs of the
Company and the Xxxxxx Companies considered as one enterprise.
(xxii) Each of the Company and the Xxxxxx Companies has good
and marketable title to all properties and assets for which ownership
is material to the business of the Company or any of the Xxxxxx
Companies and to those properties and assets described in the
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Prospectus or are not material in relation to the business of the
Company or any of the Xxxxxx Companies considered as one enterprise;
and all of the leases and subleases material to the business of the
Company or any of the Xxxxxx Companies under which the Company or any
of the Xxxxxx Companies hold properties, including those described in
the Prospectus, are valid and binding agreements of the Company and the
Xxxxxx Companies, enforceable in accordance with their terms.
(xxiii) Neither the Company nor any of the Xxxxxx Companies is
in violation of any directive from the Department or any other
regulatory authority to make any material change in the method of
conducting their respective businesses; except as described in the
Prospectus under the section "Risk Factors--New Jersey `retaliatory
tax' laws could possibly have an adverse impact on our results of
operations," the Xxxxxx Companies have conducted and are conducting
their business so as to comply in all material respects with all
applicable statutes, regulations and administrative and court decrees
(including, without limitation, all regulations, decisions, directives
and orders of the Department).
(xxiv) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge
of the Company or Xxxxxx Mutual, threatened, against or affecting the
Company or any of the Xxxxxx Companies which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might result in any material adverse change in the
financial condition, results of operations or business affairs of the
Company and the Xxxxxx Companies considered as one enterprise, or which
might materially and adversely affect the properties or assets thereof
or which might materially and adversely affect the consummation of the
Conversion; and all pending legal or governmental proceedings to which
the Company or any of the Xxxxxx Companies is a party or of which any
of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, are considered in the aggregate
not material.
(xxv) Xxxxxx Mutual has obtained an opinion of its counsel,
Xxxxxxx & Xxx, with respect to the legality of the Securities to be
issued in the Conversion, a copy of
which is filed as an exhibit to the Registration Statement. Xxxxxx
Mutual has obtained from the Internal Revenue Service a private letter
ruling (the "PLR"), concerning the material tax effects of the
Conversion and the Subscription Offering to Xxxxxx Mutual, Eligible
Policyholders, and certain other participants in the Subscription
Offering. All material aspects of the aforesaid opinion and PLR are
accurately summarized in the Prospectus; the facts and representations
upon which such opinion and PLR are based are truthful, accurate and
complete in all material respects; and neither Xxxxxx Mutual nor the
Company has taken or will take any action inconsistent therewith.
(xxvi) The Company is not and, upon completion of the
Conversion and the offerings and sale of Common Stock and the
application of the net proceeds therefrom, will not be required to be
registered under the Investment Company Act of 1940, as amended.
(xxvii) To the knowledge of the Company and Xxxxxx Mutual,
with the exception of the intended loan to Xxxxxx Mutual's ESOP by the
Company to enable the ESOP to purchase shares of Common Stock in an
amount of up to 10% of the Common Stock issued in the Conversion, none
of the Company, Xxxxxx Mutual or employees of any of the Xxxxxx
Companies has made any payment of funds of the Company or any of the
Xxxxxx Companies as a loan for the purchase of the Common Stock or made
any other payment of funds prohibited by law, and no funds have been
set aside to be used for any payment prohibited by law.
(xxviii) Except as disclosed in the Prospectus, there are no
affiliations between any directors or officers of the Company or any of
the Xxxxxx Companies and any NASD member.
(xxix) Neither the Company nor any of the Xxxxxx Companies nor
any properties owned or operated by the Company or any of the Xxxxxx
Companies is in violation of or liable under any Environmental Law (as
defined below), except for such violations or liabilities that,
individually or in the aggregate, would not have a material adverse
effect on the financial condition, results of operations or business
affairs of the Company and the Xxxxxx Companies considered as one
enterprise. There are no actions, suits or proceedings, or demands,
claims, notices or investigations (including, without limitation,
notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the knowledge of the
Company or any of the Xxxxxx Companies threatened, relating to the
liability of any property owned or operated by the Company or any of
the Xxxxxx Companies, under any Environmental Law. For purposes of this
subsection, the term "Environmental Law" means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any regulatory authority relating
to (i) the protection, preservation or restoration of the environment
(including, without limitation, air, water, vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), and/or (ii) the
use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any
substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a
component.
(xxx) Each of the Company and the Xxxxxx Companies has
fulfilled, in all material respects, its obligations, if any, under the
minimum funding standards of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations promulgated thereunder with respect to any "plan" (as
defined in Section 3(3) of ERISA and the regulations thereunder), which
is maintained by the Company or any of the Xxxxxx Companies for their
employees, and any such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and the regulations
thereunder. Neither the Company nor any of the Xxxxxx Companies has
incurred any unpaid liability under Title IV of ERISA to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan
(xxxi) Except as described in the Prospectus under the section
"Risk Factors--New Jersey 'retaliatory tax' laws could possibly have an
adverse impact on our results of operations," the Company and the
Xxxxxx Companies have filed all federal income and state and local
income and franchise tax returns required to be filed and have made
timely payments of all taxes shown as due and payable in respect of
such returns, and no deficiency has been asserted with respect thereto
by any taxing authority.
(xxxii) The Company has received approval, subject to
completion of the Conversion, to have the Securities quoted on the
National Market of the Nasdaq Stock Market ("Nasdaq Stock Market")
effective as of the Closing Time referred to in Section 2 hereof.
(xxxiii) Except as disclosed in the Prospectus, all material
reinsurance treaties or agreements to which Xxxxxx Mutual, MIC or FIC
is a party or is a named reinsured are in full force and effect.
Neither Xxxxxx Mutual, MIC or FIC, nor to the knowledge of the Company
any other party thereto, is in default under any such agreement, and no
party may terminate any such agreement by reason of the transactions
contemplated by the Conversion.
(xxxiv) The Company has filed a registration statement on Form
8-A to register the Common Stock under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and pursuant to
Form 8-A such registration statement shall be effective concurrent with
the effectiveness of the Registration Statement.
(xxxv) There is no contract or other document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
or the Conversion Application which is not described or filed as
required.
(xxxvi) The Company and each of the Xxxxxx Companies maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to cash and other
liquid assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded ledger assets are
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxxvii) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and
15d-14 under the Exchange Act); such disclosure controls and procedures
(A) are designed to ensure that material information relating to the
Company including its consolidated subsidiaries, is made known to the
Company's Chief Executive Officer and its principal financial officer
by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being
prepared, (B) have been (or will be) evaluated for effectiveness as of
a date within 90 days prior to the filing of the Company's most recent
annual or quarterly report filed with the Commission and (C) are
effective to perform the functions for which they were established; the
Company's auditors and the Audit Committee of the Board of Directors
have been advised of: (i) any significant deficiencies in the design or
operation of internal controls which could adversely affect the
Company's ability to record, process, summarize, and report financial
data and (ii) any fraud, whether or not material, that involves
management or other employees who have a role in the Company's internal
controls; and such deficiencies or fraud have either been disclosed in
the Prospectus or are not material to the Company and the Xxxxxx
Companies; and since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant
changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective
actions with regard to significant deficiencies, material weaknesses or
fraud.
(xxxviii)Except as described in the Prospectus, there are no
contractual encumbrances or contractual restrictions or regulatory
restrictions on the ability (i) of the Company to pay dividends or make
any other distributions on the Company's capital stock or (ii) of the
Company or any of the Xxxxxx Companies (A) to pay any indebtedness owed
to the Company or any of the Xxxxxx Companies, or (B) to make any loans
or advances to, or investments in, the Company or any of the Xxxxxx
Companies, or (C) to transfer any of its property or assets to the
Company or any of the Xxxxxx Companies.
(xxxix) The Company has not relied upon the Agent or Agent's
counsel for any legal, tax or accounting advice in connection with the
Conversion.
(xl) The policyholder records of Xxxxxx Mutual are accurate
and complete in all material respects.
(xli) The Department confirmed to the Company in writing on
August , 2003 that it has no further comments on the Prospectus, and
the Department has not amended or rescinded that confirmation since
that date.
(b) Any certificate signed by any officer of the Company or Xxxxxx
Mutual and delivered to either of the Agent or to counsel for the Agent shall be
deemed a representation and warranty by the Company or Xxxxxx Mutual to the
Agent as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER X'XXXXX; SALE AND DELIVERY OF THE SECURITIES;
CLOSING.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler X'Xxxxx as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of Common Stock in
the Subscription and Community Offering and the Syndicated Community Offering.
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, Sandler X'Xxxxx accepts such
appointment and agrees to use its best efforts to assist the Company with the
solicitation of subscriptions and purchase orders for Securities in accordance
with this Agreement; provided, however, that the Agent shall not be obligated to
take any action which is inconsistent with any applicable laws or regulations,
or decisions or orders of any governmental department, private or public
arbitral tribunal, court, governmental commission, governmental agency or other
governmental entity or authority. The services to be rendered by Sandler X'Xxxxx
pursuant to this appointment include the following: (i) consulting as to the
securities marketing implications of any aspect of the Plan or related corporate
documents; (ii) reviewing with the Board of Directors the financial and
securities marketing implications of the independent appraiser's appraisal of
the Common Stock; (iii) reviewing all offering documents, including the
Prospectus, stock order form and related offering materials (it being understood
that such documents are the sole responsibility of the Company and Xxxxxx
Mutual); (iv) assisting in the design and implementation of a marketing strategy
for the Offerings; (v) assisting the Company and Xxxxxx Mutual in obtaining all
requisite regulatory approvals; (vi) assisting management in preparing for
meetings with potential investors and broker-dealers; and (vii) providing such
other general advice and assistance as may be requested to promote the
successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the earlier
to occur of (a) forty-five (45) days after the last day of the Subscription and
Community Offering, unless the Company and the Agent agree in writing to extend
such period, or (b) the receipt and acceptance of subscriptions and purchase
orders for all of the Securities, or (c) the completion of the Syndicated
Community Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company and Xxxxxx
Mutual, Sandler X'Xxxxx will seek to form a syndicate of registered brokers or
dealers ("Selected Dealers") to assist in the solicitation of purchase orders of
such Securities on a best efforts basis, subject to the terms and conditions set
forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. Sandler
X'Xxxxx will endeavor to limit the aggregate fees to be paid by the Company and
Xxxxxx Mutual under any such Selected Dealers' Agreement to an amount
competitive with gross underwriting discounts charged at such time for
underwritings of comparable amounts of stock sold at a comparable
price per share in a similar market environment; provided, however, that the
aggregate fees payable to Sandler X'Xxxxx and Selected Dealers shall not exceed
7% of the aggregate Purchase Price of the Securities sold by such Selected
Dealers. Sandler X'Xxxxx will endeavor to distribute the Securities among the
Selected Dealers in a fashion which best meets the distribution objective of the
Company and the requirements of the Plan, which may result in limiting the
allocation of stock to certain Selected Dealers. It is understood that in no
event shall Sandler X'Xxxxx be obligated to act as a Selected Dealer or to take
or purchase any Securities.
In the event the Company is unable to sell at least the total minimum
of the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, without interest, and no party to
this Agreement shall have any obligation to the others hereunder, except for the
obligations of the Company and Xxxxxx Mutual as set forth in Sections 4, 6(a)
and 7 hereof and the obligations of the Agent as provided in Sections 6(b) and 7
hereof. Arrangements for placing the funds received from subscriptions for
Securities or other offers to purchase Securities in a separate escrow account
with Wilmington Trust Company until all Securities are sold and paid for were
made prior to the commencement of the Subscription Offering, with provision for
refund to the purchasers as set forth above, or for delivery to the Company if
all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the escrow
account referred to above. The closing shall be held at the King of Prussia,
Pennsylvania offices of Xxxxxxx & Xxx, at 10:00 a.m., eastern time, or at such
other place and time as shall be agreed upon by the parties hereto, on a
business day to be agreed upon by the parties hereto. The Company shall notify
the Agent by telephone, confirmed in writing, when funds shall have been
received for all the Securities. Certificates for Securities shall be delivered
directly to the purchasers thereof in accordance with their directions.
Notwithstanding the foregoing, certificates for Securities purchased through
Selected Dealers shall be made available to the Agent for inspection at least 48
hours prior to the Closing Time at such office as the Agent shall designate. The
hour and date upon which the Company shall release for delivery all of the
Securities, in accordance with the terms hereof, is herein called the "Closing
Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) one and four tenths percent (1.4%) of the aggregate Purchase Price
of the Securities sold in the Subscription and Community Offering, excluding in
each case shares purchased by (i) any employee benefit plan of the Company or
Xxxxxx Mutual established for the benefit of their respective directors,
officers and employees, (ii) any director, officer or employee of the Company or
Xxxxxx Mutual or members of their immediate families (which term shall mean
parents, grandparents, spouse, siblings, children and grandchildren), and (iii)
purchasers in the Franklin Offerings; and
(b) with respect to any Securities sold by an NASD member firm (other
than Sandler X'Xxxxx) under the Selected Dealers' Agreement in the Syndicated
Community Offering, (i) the compensation payable to Selected Dealers under any
Selected Dealers' Agreement, (ii) any sponsoring dealer's fees; and (iii) a
management fee to Sandler X'Xxxxx of one and one-half percent (1.5%) of the
aggregate Purchase Price for the Securities. Any fees payable to Sandler X'Xxxxx
for Securities sold by Sandler X'Xxxxx under any such agreement shall be limited
to an aggregate of one and one-half percent (1.5%) of the aggregate Purchase
Price of such Securities, and the aggregate fees payable to Sandler X'Xxxxx and
the selected and sponsoring dealers will not exceed seven percent (7%) of the
aggregate Purchase Price for such Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler X'Xxxxx; however, the
Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. In recognition of the long lead times involved in the
conversion process, Xxxxxx Mutual has made advance payments to the Agent in the
aggregate amount of $25,000, which shall be credited against any fees or
reimbursement of expenses payable hereunder.
SECTION 3. COVENANTS OF THE COMPANY. The Company and Xxxxxx Mutual covenant with
the Agent as follows:
(a) The Company and Xxxxxx Mutual will prepare and file such amendments
or supplements to the Registration Statement, the Prospectus, the Conversion
Application and the Proxy Statement as may hereafter be required by the
Securities Act Regulations or the Conversion Act or as may hereafter be
requested by the Agent. Following completion of the Offerings, the Company and
Xxxxxx Mutual will promptly prepare and file with the Commission a
post-effective amendment to the Registration Statement relating to the results
of the updated valuation of Xxxxxx Mutual prepared by Xxxxxxx. The Company and
Xxxxxx Mutual will notify the Agent immediately, and confirm the notice in
writing, (i) of the effectiveness of any post-effective amendment of the
Registration Statement, the filing of any supplement to the Prospectus and the
filing of any amendment to the Conversion Application, (ii) of the receipt of
any comments from the Department or the Commission with respect to the
transactions contemplated by this Agreement or the Plan, (iii) of any request by
the Commission or the Department for any amendment to the Registration Statement
or the Conversion Application or any amendment or supplement to the Prospectus
or for additional information, (iv) of the issuance by the Department of any
order suspending the Offerings or the use of the Prospectus or the initiation of
any proceedings for that purpose, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any
proceedings for that purpose, and (vi) of the receipt of any notice with respect
to the suspension of any qualification of the Securities for offering or sale in
any jurisdiction. The Company and Xxxxxx Mutual will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company and Xxxxxx Mutual will give the Agent notice of its
intention to file or prepare any amendment to the Conversion Application or
Registration Statement (including any post-effective amendment) or any amendment
or supplement to the Prospectus (including any revised prospectus which the
Company proposes for use in connection with the Syndicated Community Offering of
the Securities which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) of the
Securities Act Regulations), will furnish the Agent with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Agent or counsel for the
Agent may object.
(c) The Company and Xxxxxx Mutual will deliver to the Agent as many
signed copies and as many conformed copies of the Conversion Application and the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) as the
Agent may reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered,
the Company and Xxxxxx Mutual will comply, at their own expense, with all
requirements imposed upon them by the Department, by the Conversion Act, as from
time to time in force, and by the Nasdaq, the Securities Act, the Securities Act
Regulations, the Exchange Act, and the rules and regulations of the Commission
promulgated thereunder, including, without limitation, Regulation M under the
Exchange Act, so far as necessary to permit the continuance of sales or dealing
in shares of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company and Xxxxxx Mutual will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to counsel for the
Agent) so that, as so amended or supplemented, the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company and Xxxxxx Mutual will furnish to the Agent a
reasonable number of copies of such amendment or supplement. For the purpose of
this subsection, the Company and Xxxxxx Mutual will each furnish such
information with respect to itself as the Agent may from time to time reasonably
request.
(f) The Company and Xxxxxx Mutual will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and sale
under the applicable securities laws of such states of the United States and
other jurisdictions as may be required and as the Agent and
the Company have agreed; provided, however, that the Company and Xxxxxx Mutual
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Securities have been so qualified,
the Company and Xxxxxx Mutual will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement.
(g) The Company authorizes Sandler X'Xxxxx and any Selected Dealers to
act as agent of the Company in distributing the Prospectus to persons entitled
to receive subscription rights and other persons to be offered Securities having
record addresses in the states or jurisdictions set forth in a survey of the
securities or "blue sky" laws of the various jurisdictions in which the
Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve month period
beginning not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the Registration
Statement.
(i) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to its shareholders as soon as
practicable after the end of each such fiscal year an annual report (including
consolidated statements of financial condition and consolidated statements of
income, shareholders' equity and cash flows, 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 first such fiscal quarter
ending after the effective date of the Registration Statement), consolidated
summary financial information of the Company and the Xxxxxx Companies for such
quarter in reasonable detail. In addition, annual and quarterly consolidated
summary financial information shall be made public through the issuance of
appropriate press releases at the same time or prior to the time of the
furnishing thereof to shareholders of the Company.
(j) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to the Agent (i) as soon as publicly
available, a copy of each report or other document of the Company furnished
generally to shareholders of the Company or furnished to or filed with the
Commission under the Exchange Act or any national securities exchange or system
on which any class of securities of the Company is listed, and (ii) from time to
time, such other publicly available information concerning the Company as the
Agent may reasonably request.
(k) The Company and Xxxxxx Mutual will conduct the Conversion in all
material respects in accordance with the Plan, the Conversion Act and all other
applicable regulations, decisions and orders, including all applicable terms,
requirements and conditions precedent to the Conversion imposed upon the Company
or Xxxxxx Mutual by the Department.
(l) The Company and Xxxxxx Mutual will use the net proceeds received
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(m) The Company will file with the Commission such report as may be
required pursuant to Rule 463 of the Securities Act Regulations, if such report
or substantially similar report is required by the SEC.
(n) The Company will maintain the effectiveness of its Exchange Act
Registration Statement for not less than three years. The Company will use best
efforts to effect and maintain its listing on the Nasdaq Stock Market/NMS and
will comply with all applicable listing standards relating thereto.
(o) The Company and Xxxxxx Mutual will take such actions and furnish
such information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the National Association of Securities Dealers, Inc.'s
"Interpretation Relating to Free-Riding and Withholding."
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the prior
written consent of the Agent, sell or issue, contract to sell or otherwise
dispose of, any shares of Common Stock other than the Securities for a period of
180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on the
fifth anniversary of the Closing Time, or the date on which the Agent receives
full payment in satisfaction of any claim for indemnification or contribution to
which it may be entitled pursuant to Sections 6 or 7 which is pending upon such
fifth anniversary, neither the Company nor Xxxxxx Mutual shall, without the
prior written consent of the Agent, which consent shall not be unreasonably
withheld, take or permit to be taken any action that could result in Xxxxxx
Common Stock becoming subject to any security interest, mortgage, pledge, lien
or encumbrance.
(r) The Company and Xxxxxx Mutual will comply with any conditions
imposed by or agreed to with the Department in connection with their approval of
the Plan.
(s) The Company shall not deliver the Securities until the Company and
Xxxxxx Mutual have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived in writing by the Agent.
(t) The Company or Xxxxxx Mutual will furnish to Sandler X'Xxxxx as
early as practicable prior to the delivery of the letters to be furnished by
KPMG LLP pursuant to subsections (e) and (f) of Section 5 hereof, but no later
than two (2) full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of Xxxxxx Mutual and the
Subsidiaries which have been read by KPMG LLP, as stated in their letters to be
furnished pursuant to subsections (e) and (f) of Section 5 hereof.
(u) The Company and the Xxxxxx Companies will, prior to the Closing
Time, conduct their respective businesses in compliance in all material respects
with all applicable federal and state laws, rules, regulations, decisions,
directives and orders, including all decisions, directives
and orders of the Commission, the Nasdaq Stock Market, the Department and the
New Jersey Department.
(v) The Company will not amend the Plan in any manner during the
pendency of the Offerings without the consent of the Agent.
(w) The Company will not, prior to the Closing Time, incur any
liability or obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business consistent with past
practice, except as contemplated by the Prospectus.
(x) The Company will use all reasonable efforts to comply with, or
cause to be complied with, the conditions precedent to the several obligations
of the Agent specified in Section 5 hereof.
(y) The Company will provide the Agent with any information necessary
to carry out the allocation of the Securities in the event of an
oversubscription, and such information will be accurate and reliable in all
material respects.
(z) The Company will notify the Agent when funds have been received
for the minimum number of Securities set forth in the Prospectus.
(aaa) The Company shall not distribute the Prospectus to any
prospective purchaser in the Offerings until the Department has confirmed to
the Company in writing that it has no further comments on the Prospectus. The
Company shall notify the Agent upon receipt of any further written or oral
comments on the Prospectus from the Department.
SECTION 4. PAYMENT OF EXPENSES.
The Company and Xxxxxx Mutual jointly and severally agree to pay all
expenses incident to the performance of their obligations under this Agreement,
including but not limited to (i) the cost of obtaining all securities and
insurance regulatory approvals, (ii) the preparation, printing and filing of the
Registration Statement and the Conversion Application as originally filed and of
each amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the purchasers in the Offerings, (iv) the
fees and disbursements of the Company's and Xxxxxx Mutual's counsel,
accountants, appraiser and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the fees and disbursements of counsel in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Agent (in such quantities as the
Agent shall reasonably request) of copies of the Registration Statement as
originally filed and of each amendment thereto and the printing and delivery of
the Prospectus and any amendments or supplements thereto to the purchasers in
the Offerings and the Agent (in such quantities as the Agent shall reasonably
request), (vii) any printing and delivery to the Agent of copies of a Blue Sky
Survey, and (viii) the fees and expenses incurred in connection with the listing
of the Securities on the Nasdaq Stock Market. In the event the Agent incurs any
such fees and expenses on behalf of Xxxxxx Mutual or the Company, Xxxxxx Mutual
will reimburse the Agent for such fees and expenses whether or not the
Conversion is consummated; provided, however, that the Agent shall not incur any
substantial expenses on behalf of Xxxxxx Mutual or the Company pursuant to this
Section without the prior approval of Xxxxxx Mutual.
The Company and Xxxxxx Mutual jointly and severally agree to pay
certain expenses incident to the performance of the Agent's obligations under
this Agreement, regardless of whether the Conversion is consummated, including
(i) the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (ii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, advertising, promotional, syndication
and travel expenses and fees and expenses of the Agent's counsel, up to a
maximum amount of $100,000. All fees and expenses to which the Agent is entitled
to reimbursement under this paragraph of this Section 4 shall be due and payable
upon receipt by the Company or Xxxxxx Mutual of a written accounting therefor
setting forth in reasonable detail the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS.
The Company, Xxxxxx Mutual and the Agent agree that the issuance and
the sale of Securities and all obligations of the Agent hereunder are subject to
the accuracy of the representations and warranties of the Company and Xxxxxx
Mutual herein contained as of the date hereof and the Closing Time, to the
accuracy in all material respects of the statements of officers and directors of
the Company and Xxxxxx Mutual made pursuant to the provisions hereof, to the
performance by the Company and Xxxxxx Mutual of their obligations hereunder, and
to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Conversion shall have been issued or proceedings therefor initiated or
threatened by the Department, and no order suspending the sale of the Securities
in any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of Xxxxxxx &
Xxx, counsel for the Company and Xxxxxx Mutual, in form and substance
satisfactory to counsel for the Agent, to the effect that:
(i) The Company has been incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement; and to the best of such counsel's
knowledge the Company is not transacting business in any other
jurisdiction in which qualification as a foreign corporation is
required to transact business, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect upon the
financial condition, results of operations or business affairs of the
Company and the Xxxxxx Companies, considered as one enterprise.
(ii) An opinion to the same general effect as subsection
5(b)(1)(i) in respect of each of the Xxxxxx Companies.
(iii) Xxxxxx Mutual has all requisite power and authority to
enter into and perform its obligations under the Agreement and to carry
on an insurance business pursuant to and to the extent of the
certificates of authority issued under the laws of the Commonwealth of
Pennsylvania and the State of New Jersey; MIC and FIC have all
requisite power and authority to carry on an insurance business
pursuant to and to the extent of the certificate of authority issued
under the laws of the State of New Jersey and the Commonwealth of
Pennsylvania, respectively; the Company and each of the Xxxxxx
Companies has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their respective
businesses, except where the failure to obtain any such license, permit
or authorization would not have a material adverse effect upon the
financial condition, results of operations or business affairs of the
Company and the Xxxxxx Companies, considered as one enterprise.
(iv) The Securities have been duly and validly authorized for
issuance and sale and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated as
set forth in the Plan, will be duly and validly issued and fully paid
and non-assessable; and all corporate actions required to be taken for
the authorization, issuance and sale of the Securities have been
validly and sufficiently taken.
(v) The issuance of the Securities is not subject to
preemptive or other similar rights arising by operation of law or under
the articles of incorporation or bylaws of the Company or Xxxxxx
Mutual.
(vi) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be within the
range set forth in the Prospectus under "Capitalization" and no shares
of Common Stock have been or will be issued and outstanding prior to
the Closing Time.
(vii) All of the issued and outstanding capital stock of each
of QHC and MIC has been duly authorized and validly issued and, to such
counsel's best knowledge, is fully paid and non-assessable and is owned
by Xxxxxx Mutual, directly or through subsidiaries, to such counsel's
knowledge free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, except such as would not result in
a material adverse effect on the financial condition or results of
operations of Xxxxxx Mutual and its subsidiaries, taken as a whole.
(viii) Upon consummation of the Conversion, all of the issued
and outstanding capital stock of Xxxxxx Mutual when issued and
delivered pursuant to the Plan against payment of consideration as set
forth in the Plan and set forth in the Prospectus, will be duly
authorized and validly issued and fully paid and nonassessable, and all
such capital stock will be owned beneficially and of record by the
Company, to the
best of such counsel's knowledge free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including without
limitation the Conversion, have been duly and validly authorized by all
necessary corporate action on the part of each of the Company and
Xxxxxx Mutual, and this Agreement constitutes the legal, valid and
binding agreement of each of the Company and Xxxxxx Mutual, enforceable
in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited under applicable law (it being
understood that such counsel may avail itself of customary exceptions
concerning the effect of bankruptcy, insolvency or similar laws and the
availability of equitable remedies); the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein, including without
limitation the Conversion, will not result in any violation of the
provisions of the charter or by-laws of the Company or any of the
Xxxxxx Companies; and, to the best of such counsel's knowledge, the
execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the transactions
contemplated herein, including without limitation the Conversion, will
not constitute a breach of, or default under, and no event has occurred
which, with notice or lapse of time or both, would constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance, that, individually or in the aggregate, would have a
material adverse effect on the financial condition, results of
operations or business affairs of the Company and the Xxxxxx Companies
considered as one enterprise, upon any property or assets of the
Company or any of the Xxxxxx Companies pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
described in or filed as an exhibit to the Registration Statement.
(x) The Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or, to
the best of such counsel's knowledge, proceedings therefor initiated or
threatened by the Commission. The Department confirmed in writing on
_________, 2003 that it has no further comments on the Prospectus, and
the Department has not amended or rescinded that confirmation since
that date.
(xi) Subject to the satisfaction of any conditions set forth
in any approvals or orders received from the Department or the New
Jersey Department of Banking and Insurance required to be performed
after the date of the opinion, no further approval, authorization,
consent or other order of any public board or body is required in
connection with the execution and delivery of this Agreement, the
issuance of the Securities and the consummation of the Conversion,
except as may be required under the securities or Blue Sky laws of
various jurisdictions as to which no opinion need be rendered.
(xii) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements, notes
to financial statements, financial tables and other financial and
statistical data included therein and the appraisal
valuation as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the Securities Act
and the Securities Act Regulations and the Conversion Act.
(xiii) The Common Stock conforms to the description thereof
contained in the Prospectus, and the form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable statutory requirements.
(xiv) To the best of such counsel's knowledge and without
performing any docket search or similar search of judicial or
administrative records (i) except as described in the Prospectus under
the section "Risk Factors--New Jersey 'retaliatory tax' laws could
possibly have an adverse impact on our results of operations," there
are no legal or governmental proceedings pending or threatened against
or affecting the Company or any of the Xxxxxx Companies which are
required, individually or in the aggregate, to be disclosed in the
Registration Statement and Prospectus, other than those disclosed
therein, and (ii) all pending legal or governmental proceedings to
which the Company or any of the Xxxxxx Companies is a party or to which
any of their property is subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, are considered, in the aggregate, not
material.
(xv) The information in the Prospectus under
"Business--Regulation," "The Conversion--Effect of Conversion on
Policyholders," "Risk Factors -- New Jersey 'retaliatory tax' laws
could possibly have an adverse impact on our results of operations,"
"The Conversion--Tax Effects Generally," "The Conversion -- Tax
Consequences of Subscription Rights," "Certain Restrictions on
Acquisition of the Holding Company" and "Description of the Capital
Stock," to the extent that it constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is complete and accurate in all material respects.
(xvi) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed as exhibits thereto,
and the descriptions thereof or references thereto are correct in all
material respects.
(xvii) The Conversion Application complies in all material
respects with the applicable requirements of the Conversion Act,
includes all documents required to be filed as exhibits thereto, and
is, to the best of such counsel's knowledge and information, truthful,
accurate and complete in all material respects. The Plan has been duly
authorized by all necessary corporate actions, and all necessary
regulatory consents thereto and regulatory approvals thereof have been
obtained and the Conversion has been consummated; Xxxxxx Mutual's
charter has been amended to authorize the issuance of capital stock; to
the best of such counsel's knowledge, the Company and Xxxxxx Mutual
have conducted the Conversion in all material respects in accordance
with applicable requirements of the Conversion Act, the Plan and all
other applicable regulations, decisions and orders of the Department,
including all material applicable terms, conditions, requirements and
conditions precedent to the Conversion imposed upon the
Company or Xxxxxx Mutual by the Department, except for those required
to be completed after the date of the opinion, and, to the best of such
counsel's knowledge, no order has been issued by the Department to
suspend the Conversion and no action for such purpose has been
instituted or threatened by the Department; and, to the best of such
counsel's knowledge, no person has sought to obtain review of the final
action of the Department in approving the Plan.
(xviii) Neither the Company nor any of the Xxxxxx Companies is
in violation of its articles of incorporation or, to the best of such
counsel's knowledge, in default (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument described in or filed as an
exhibit to the Registration Statement.
(xix) The Company is not and upon completion of the Conversion
and Offering will not be required to be registered as an investment
company under the Investment Company Act of 1940.
(2) The favorable opinion, dated as of Closing Time, of Lord,
Bissell & Brook, counsel for the Agent, with respect to certain of the
matters set forth in Sections 5(b)(1)(i), (iv), (v), (vi) and (xii) as
the Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l) and
(b)(2), respectively, of this Section, Xxxxxxx & Xxx and Lord, Bissell
& Brook shall each additionally state to the effect that during the
preparation of the Registration Statement and the Prospectus, such
counsel participated in conferences with certain officers and other
representatives of the independent public accountants for the Company
and the Xxxxxx Companies and representatives of the Agent at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon
the accuracy of the statements contained in the Registration Statement
and Prospectus (except as otherwise provided in subsections (b)(1) and
(b)(2)), on the basis of the foregoing and without independent
verification (relying as to factual matters on certificates and other
factual representations provided by officers of the Company and the
Xxxxxx Companies), nothing has come to their attention that would lead
them to believe that the Registration Statement (except for financial
statements and schedules and other financial or statistical data
included therein, as to which counsel need make no statement), at the
time it became effective, 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 the
Prospectus (except for financial statements and schedules and other
financial or statistical data included therein, as to which counsel
need make no statement), at the time the Registration Statement became
effective or at Closing Time, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. In giving their opinions, Xxxxxxx
& Xxx and Lord, Bissell & Brook may rely as to matters of fact, to the
extent
such counsel deems proper, on certificates of officers and directors of
the Company and Xxxxxx Mutual and certificates of public officials,
provided that copies of any such certificates are delivered to the
Agent together with the opinion to be rendered by such counsel, and
Lord, Bissell & Brook may also rely on the opinion of Xxxxxxx & Xxx
regarding matters of Pennsylvania law. Further, the opinion of Xxxxxxx
& Xxx may be limited to matters governed by the laws of the
Commonwealth of Pennsylvania and federal law.
(c) At Closing Time referred to in Section 2, the Plan shall have been
approved by the policyholders of Xxxxxx Mutual and Xxxxxx Mutual shall have
completed in all material respects the conditions precedent to the Conversion in
accordance with the Plan, the Conversion Act and all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Conversion imposed upon the Company or Xxxxxx
Mutual by the Department, or any other regulatory authority, other than those
which the Department permits to be competed after the Conversion.
(d) At Closing Time, there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change in the financial condition, results of
operations or business affairs of the Company and the Xxxxxx Companies
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Agent shall have received a certificate of the President and
Chief Executive Officer of the Company and of Xxxxxx Mutual, and the chief
financial or chief accounting officer of the Company and of Xxxxxx Mutual, dated
as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) there shall have been no material transaction entered into
by the Company or Xxxxxx Mutual from the latest date as of which the financial
condition of the Company or Xxxxxx Mutual is set forth in the Registration
Statement and the Prospectus, other than transactions referred to or
contemplated therein and transactions in the ordinary cause of business, (iii)
neither the Company nor Xxxxxx Mutual shall have received from the Department
any direction (oral or written) to make any material change in the method of
conducting its business (which direction, if any, shall have been disclosed to
the Agent) which materially and adversely would affect the business, financial
condition or results of operations of the Company or Xxxxxx Mutual, (iv) the
representations and warranties in Section 1 hereof are true and correct in all
material respects with the same force and effect as though expressly made at and
as of the Closing Time, (v) the Company and Xxxxxx Mutual have complied in all
material respects with all agreements and satisfied in all material respects all
conditions on their part to be performed or satisfied at or prior to Closing
Time, (vi) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission and (vii) no order suspending any of
the Offerings or the authorization for final use of the Prospectus has been
issued and no proceedings for that purpose have been initiated or threatened by
the Department and no person has sought to obtain regulatory or judicial review
of the action of the Department in approving the Plan in accordance with the
Conversion Act.
(e) At the time of the execution of this Agreement, the Agent shall
have received from KPMG LLP a letter dated such date, in form and substance
satisfactory to the Agent, to the effect that (i) they are independent public
accountants with respect to the Company and the Xxxxxx
Companies within the meaning of the Securities Act and the Securities Act
Regulations and the Conversion Act; (ii) it is their opinion that the
consolidated financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as to form
in all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations; (iii) based upon limited
procedures as agreed upon by the Agent and KPMG LLP set forth in detail in such
letter, nothing has come to their attention which causes them to believe that
(A) the unaudited financial statements of the Xxxxxx Companies included in the
Registration Statement do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, the Securities Act
Regulations Act or are not presented in conformity with generally accepted
accounting principles, (B) the unaudited pro forma consolidated financial data
of the Company included in the Registration Statement do not comply as to form
in all material respects with the applicable accounting requirements of rule
11-02 of Regulation S-X and that the pro forma adjustments were not properly
applied to the applicable historical amounts in the compilation of such data,
(C) at a specified date not more than five days prior to the date of this
Agreement, there has been any change in capital stock, increase in the
consolidated debt or any decrease in consolidated assets or surplus of the
Xxxxxx Companies, in each case as compared with the amounts shown in the [March
31, 2003] balance sheet included in the Registration Statement or, (D) during
the period from the date of such balance sheet to a specified date not more than
five days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding year, in consolidated
net income of the Xxxxxx Companies, except in all instances for increases or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur; and (iv) in addition to the examination referred to in
their opinions and the limited procedures referred to in clause (iii) above,
they have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are specified by
the Agent, and have found such amounts, percentages and financial information to
be in agreement with the relevant accounting, financial and other records of the
Company and the Xxxxxx Companies identified in such letter.
(f) At Closing Time, the Agent shall have received from KPMG LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(g) At Closing Time, the Securities shall have been approved for
listing on the Nasdaq Stock Market upon notice of issuance.
(h) At Closing Time, the Agent shall have received a letter from
Xxxxxxx, dated as of the Closing Time, confirming its appraisal.
(i) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein contemplated
and related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Agent and counsel
for the Agent.
(j) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis, or any change or development involving a prospective
change in political, financial or economic conditions, in each case the effect
of which, in the reasonable judgment of the Agent, is so material and adverse as
to make it impracticable to market the Securities or to enforce contracts,
including subscriptions or orders, for the sale of the Securities, and (ii)
trading generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall not have been suspended, and minimum or maximum prices for
trading shall not have been fixed, or maximum ranges for prices for securities
have been required, by either of said trading markets or by order of the
Commission or any other governmental authority, and a banking moratorium shall
not have been declared by either Federal or New York authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and Xxxxxx Mutual, jointly and severally, agree to
indemnify and hold harmless the Agent, each person, if any, who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), the Agent and its respective partners, directors, officers, employees and
agents as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out,
in whole or in part, of the Conversion or any action taken by the Agent
where acting as agent of the Company or Xxxxxx Mutual or otherwise as
described in Section 2 hereof; provided, however, that this indemnity
agreement shall not apply to any loss, liability, claim, damage or
expense found in a final judgment by a court of competent jurisdiction
to have resulted primarily from the bad faith, willful misconduct or
gross negligence of the Agent seeking indemnification hereunder.
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out
of, in whole or in part, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement
of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement
is effected with the written consent of the Company or Xxxxxx Mutual,
which consent shall not be unreasonably withheld or delayed; and
(iv) from and against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing for or defending against any litigation, or
any investigation, proceeding or inquiry by any governmental agency or
body, commenced or threatened, or any claim whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not
paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading which was made in reliance upon and in conformity with the Agent
Information furnished to the Company or Xxxxxx Mutual expressly for use in the
Prospectus (or any amendment or supplement thereto).
(b) The Agent agrees to indemnify and hold harmless the Company,
Xxxxxx Mutual, their directors, each of their officers, agents and employees,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, of a
material fact made in the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall without the prior written consent of the indemnified
parties (which shall not be unreasonably withheld or delayed), settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding 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.
(d) The Company and Xxxxxx Mutual also agree that the Agent shall not
have any liability (whether direct or indirect, in contract or tort or
otherwise) to Xxxxxx Mutual, the Company, its security holders or Xxxxxx
Mutual's or the Company's creditors relating to or arising out of the engagement
of the Agent pursuant to, or the performance by the Agent in good faith of the
services contemplated by, this Agreement, except to the extent that any loss,
claim, damage or liability is found in a final judgment by a court of competent
jurisdiction to have resulted primarily from the Agent's bad faith, willful
misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that any Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, Xxxxxx Mutual, the Agent or any of its
respective affiliates or any participant in the transactions contemplated hereby
in which the Agent or such person or agent is not named as a defendant, the
Company and Xxxxxx Mutual jointly and severally agree to reimburse the Agent for
all reasonable and necessary out-of-pocket expenses incurred by it in connection
with preparing or appearing as a witness or otherwise giving testimony and to
compensate the Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, Xxxxxx Mutual and the
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company or Xxxxxx Mutual and the Agent, as incurred, in such proportions (i)
that the Agent is responsible for that portion represented by the percentage
that the maximum aggregate marketing fees appearing on the cover page of the
Prospectus bears to the maximum aggregate gross proceeds appearing thereon and
the Company and Xxxxxx Mutual are jointly and severally responsible for the
balance or (ii) if, but only if, the allocation provided for in clause (i) is
for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company and Xxxxxx Mutual on the
one hand and the Agent on the other, as reflected in clause (i), but also the
relative fault of the Company and Xxxxxx Mutual on the one hand and the Agent on
the other, as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section, each partner, director, officer, employee
and agent of the Agent, and each person, if any, who controls the Agent within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Agent, and each director,
officer, agent and employee of the Company, and Xxxxxx Mutual, and each person,
if any, who controls the Company or Xxxxxx Mutual within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company and Xxxxxx Mutual. Notwithstanding
anything to the contrary set forth herein, to the extent permitted by applicable
law, in no event shall the Agent be required to contribute an aggregate amount
in excess of the aggregate marketing fees to which the Agent is entitled and
actually paid pursuant to this Agreement.
The relative fault of the Company and Xxxxxx Mutual, on the one hand,
and the Agent, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statements of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company and Xxxxxx Mutual or by the Agent and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and Xxxxxx Mutual and the Agent agree that it would not be
just and equitable if contribution pursuant to this Section 7 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 Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or Xxxxxx
Mutual submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company, at any
time at or prior to Closing Time (i) if there has been, since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the financial condition, results of operations or
business affairs of the Company or Xxxxxx Mutual, or the Company and the Xxxxxx
Companies considered as one enterprise, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material adverse change in
the financial markets in the United States or elsewhere or any outbreak of
hostilities or escalation thereof or other calamity or crisis, or any change or
development involving a prospective change in political, financial or
economic conditions, in each case the effect of which, in the reasonable
judgment of the Agent, is so material and adverse as to make it impracticable to
market the Securities or to enforce contracts, including subscriptions or
orders, for the sale of the Securities, (iii) or if trading generally on the
Nasdaq Stock Market or New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said trading markets or by order of
the Commission or any other governmental authority, or if a banking moratorium
has been declared by either Federal or New York authorities, (iv) if any
condition specified in Section 5 shall not have been fulfilled when and as
required to be fulfilled; (v) if there shall have been such material adverse
change in the condition or prospects of the Company or Xxxxxx Mutual or the
prospective market for the Company's securities which in the Agent's good faith
opinion would make it inadvisable to proceed with the offering, sale or delivery
of the Securities; (vi) if in the Agent's good faith opinion, the price for the
Securities established by Xxxxxxx is not reasonable or equitable under then
prevailing market conditions, or (vii) if the Conversion is not consummated
within 45 days following the Termination Date (as defined in the Prospectus).
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agent shall be directed to the Agent
at 000 0xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of Xxxxxxxxx
X. Xxxxxx, Principal (with a copy to Xxxx X. Xxxxxxx, Esq. and J. Xxxxx
Xxxxxxxxx, Esq., Lord, Bissell & Brook, 000 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
60603); notices to the Company and Xxxxxx Mutual shall be directed to either of
them at 00 Xxxxx Xxxxxxx 00, Xxxxxxxxxx, Xxx Xxxxxx 00000, attention of Xxxxxx
X. Speaker, President (with a copy to Xxxxxxx X. Xxxxxxx, Esq. and Xxxxxx X.
Xxxxx, Esq., Xxxxxxx & Xxx, 000 Xxxxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx xx
Xxxxxxx, Xxxxxxxxxxxx 19406).
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Agent, the Company and Xxxxxx Mutual and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Agent, the Company and
Xxxxxx Mutual and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent, the Company and Xxxxxx
Mutual and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written agreements heretofore made, except for the
engagement letter dated November 8, 2002, by and between the Agent and the
Company and Xxxxxx Mutual, relating to the Agent's providing conversion agent
services to the Company and Xxxxxx Mutual in connection with the Conversion. No
waiver, amendment or other modification of this Agreement shall be effective
unless in writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said State without regard to the conflicts of laws provisions
thereof. Unless otherwise noted, specified times of day refer to Eastern time.
SECTION 14. SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
SECTION 15. HEADINGS.
Sections headings are not to be considered part of this Agreement, are
for convenience and reference only, and are not to be deemed to be full or
accurate descriptions of the contents of any paragraph or subparagraph.
[Signature page follows]
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company and Xxxxxx Mutual in accordance with its terms.
Very truly yours,
XXXXXX INSURANCE GROUP, INC.
By:______________________________________
Title:____________________________________
XXXXXX MUTUAL INSURANCE COMPANY
By:______________________________________
Title:____________________________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER X'XXXXX & PARTNERS, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By:________________________________
Title_______________________________
