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EXHIBIT 1.1
Up to 3,769,444 Shares
▇▇▇▇▇▇ INSURANCE GROUP, INC.
(a Pennsylvania corporation)
Common Stock
(no par value per share)
AGENCY AGREEMENT
_____________________, ▇▇▇▇
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ & PARTNERS, L.P.
Two World Trade Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ Insurance Group, Inc., a Pennsylvania corporation (the
"Company"), and ▇▇▇▇▇▇ Mutual Insurance Company, a Pennsylvania mutual insurance
company ("▇▇▇▇▇▇ Mutual"), hereby confirm their agreement with Sandler ▇'▇▇▇▇▇ &
Partners, L.P. ("Sandler ▇'▇▇▇▇▇" or the "Agent") with respect to the offer and
sale by the Company of up to 3,769,444 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 ▇▇▇▇▇▇ Mutual
and its subsidiary, Queenstown Holding Company ("QHC"), the holding company for
▇▇▇▇▇▇ Insurance Company ("MIC," and collectively with QHC and ▇▇▇▇▇▇ Mutual,
the "▇▇▇▇▇▇ Companies"). The Securities are being offered in connection with the
conversion of ▇▇▇▇▇▇ Mutual from mutual to stock form (the "Conversion") and the
simultaneous acquisition of the capital stock of ▇▇▇▇▇▇ Mutual by the Company
pursuant to a plan of conversion which has been adopted by the Board of
Directors of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual and in force as of the close of business on
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October 17, 1997 ("Eligible Policyholders"), (ii) a tax-qualified employee stock
ownership plan of the Company (the "ESOP"), and (iii) directors, officers and
employees of the ▇▇▇▇▇▇ Mutual. Subscription rights in any category will be
subordinated to subscription rights in a prior category.
Concurrently, and 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 ▇▇▇▇▇▇ Mutual to market and distribute
policies of insurance, and their owners, (iv) named insureds under policies of
insurance issued by ▇▇▇▇▇▇ Mutual after October 17, 1997, and (v) providers of
goods and services to, and identified by, ▇▇▇▇▇▇ Mutual.
It is currently anticipated by the Company and ▇▇▇▇▇▇ Mutual
that any Securities not subscribed for in the Subscription and Community
Offering will be offered, subject to Section 3 hereof, in a syndicated community
offering (the "Syndicated Community Offering"). The Subscription and Community
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.
333-41497), 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.
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 ▇▇▇▇▇▇ Mutual, the Company, the Subscription and Community
Offering, and the Common Stock.
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SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and ▇▇▇▇▇▇ 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 and no proceedings therefor have been initiated or, to the
knowledge of the Company or ▇▇▇▇▇▇ Mutual, threatened by the
Commission. 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 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 ▇▇▇▇▇▇ Mutual acknowledge appears
only in the sections captioned "Market for Common Stock" and the first
two paragraphs of the section "The Conversion-- Marketing and
Underwriting Arrangements" of the Prospectus).
(ii) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual's
Notice and Proxy Statement relating to the Conversion (the "Proxy
Statement"). The Department has, by written order dated __________,
1998, 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 or, to
the knowledge of the Company or ▇▇▇▇▇▇ Mutual, threatened by the
Department. 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 ▇▇▇▇▇▇ 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
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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 Prospectus or
any supplemental sales literature authorized by the Company or ▇▇▇▇▇▇
Mutual for use in connection with the Offerings.
(v) At the Closing Time referred to in Section 2, the
Company and ▇▇▇▇▇▇ Mutual will have completed the conditions precedent
to the Conversion in accordance with the Plan, the ConversionAct 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 ▇▇▇▇▇▇ Mutual by any
regulatory authority, other than those which the regulatory authority
permits to be completed after the Conversion.
(vi) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co., which prepared the valuation
of ▇▇▇▇▇▇ Mutual as part of the Conversion, has advised the Company and
▇▇▇▇▇▇ Mutual in writing that it satisfies all requirements for an
appraiser set forth in the Conversion Act.
(vii) The accountants who certified the consolidated
financial statements and supporting schedules of ▇▇▇▇▇▇ Mutual included
in the Registration Statement have advised the Company and ▇▇▇▇▇▇
Mutual in writing that they are independent public accountants within
the meaning of the Code of Ethics of the American Institute of
Certified Public Accountants and such accountants are, with respect to
the Company and each of the ▇▇▇▇▇▇ Companies, independent certified
public accountants as required by the Securities Act and the Securities
Act Regulations.
(viii) The only subsidiaries of ▇▇▇▇▇▇ Mutual are QHC and
MIC. Upon consummation of the Conversion, the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Companies for the periods to which they relate. The financial
information set forth in the Prospectus under
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"Selected Consolidated Financial Data" presents fairly, on the basis
stated in the Prospectus, the information set forth therein.
(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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies which are material with respect to the
Company and the ▇▇▇▇▇▇ Companies, considered as one enterprise.
(xi) The Company and each of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies,
considered as one enterprise. ▇▇▇▇▇▇ 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
States of Pennsylvania and New Jersey. MIC 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
State of New Jersey. Except as disclosed in the Prospectus, the
authority of each of ▇▇▇▇▇▇ Mutual and MIC 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 ▇▇▇▇▇▇ Companies is
a party to any agreement, formal or informal, with any regulatory
official or other person limiting the ability of any of the ▇▇▇▇▇▇
Companies from making full use of the licenses, certificates, permits
and other authorizations issued to it or requiring the Company or any
of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies, considered as one enterprise.
(xii) The Company and each of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies, considered as
one enterprise. The Company and each of the ▇▇▇▇▇▇ Companies has
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses or
required
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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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies is in all material respects in
compliance therewith; neither the Company nor any of the ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Companies,
considered as one enterprise.
(xiii) Upon consummation of the Conversion, the
authorized, issued and outstanding capital stock of the Company will be
as 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 ▇▇▇▇▇▇ Mutual will be 100,000 shares of common stock,
par value $1.00 per share (the "▇▇▇▇▇▇ Common Stock"), and no shares of
▇▇▇▇▇▇ Common Stock have been or will be issued prior to the Closing
time referred to in Section 2. The shares of ▇▇▇▇▇▇ Common Stock to be
issued to the Company will have been duly authorized for issuance and,
when issued and delivered by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Common Stock will conform with the requirements of applicable laws and
regulations; and the issuance of ▇▇▇▇▇▇ Common Stock is not subject to
preemptive or similar rights.
(xv) All of the issued and outstanding capital stock of
QHC and MIC has been duly authorized and validly issued, is fully paid
and nonassessable and is owned by
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▇▇▇▇▇▇ Mutual, directly or indirectly, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or legal or equitable
claim.
(xvi) The Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇
Companies will have (A) issued any securities or incurred any liability
or obligation, direct or contingent, or borrowed money, except
borrowings in the ordinary course of business from the same or similar
sources and in similar amounts 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Companies
is in violation of its certificate of incorporation, organization
certificate, articles of incorporation or charter, as the case may be,
or bylaws (and ▇▇▇▇▇▇ Mutual will not be in violation of its charter or
bylaws upon consummation of the Conversion); and neither the Company
nor any of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies
considered as one enterprise; and there are no contracts or documents
of the Company, ▇▇▇▇▇▇ Mutual or any of the ▇▇▇▇▇▇ Companies which are
required to be filed as exhibits to the Registration Statement or the
Conversion Application which have not been so filed.
(xx) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein
do not and will not conflict with or
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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 ▇▇▇▇▇▇ Companies pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies exists or, to the knowledge of the
Company or ▇▇▇▇▇▇ Mutual, is imminent or threatened; and the Company
and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies considered as one
enterprise.
(xxii) Each of the Company and the ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies considered as one enterprise;
and all of the leases and subleases material to the business of the
Company or any of the ▇▇▇▇▇▇ Companies under which the Company or any
of the ▇▇▇▇▇▇ Companies hold properties, including those described in
the Prospectus, are valid and binding agreements of the Company and the
▇▇▇▇▇▇ Companies, enforceable in accordance with their terms.
(xxiii) Neither the Company nor any of the ▇▇▇▇▇▇ 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; the ▇▇▇▇▇▇ 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) 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 ▇▇▇▇▇▇ Mutual,
threatened, against or affecting the Company or any of the ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Companies
considered as one enterprise, or which might materially and adversely
affect the
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properties or assets thereof or which might materially and adversely
affect the consummation of the Conversion; all pending legal or
governmental proceedings to which the Company or any of the ▇▇▇▇▇▇
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; and there are
no contracts or documents of the Company or any of its subsidiaries
which are required to be filed as exhibits to the Registration
Statement or the Conversion Application which have not been so filed.
(xxv) ▇▇▇▇▇▇ Mutual has obtained an opinion of its
counsel, ▇▇▇▇▇▇▇ & ▇▇▇, 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. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual nor the Company has taken or will take any action
inconsistent therewith.
(xxvi) The Company is not required to be registered under
the Investment Company Act of 1940, as amended.
(xxvii) To the knowledge of the Company and ▇▇▇▇▇▇ Mutual,
with the exception of the intended loan to ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ Mutual or employees of any of the ▇▇▇▇▇▇
Companies has made any payment of funds of the Company or any of the
▇▇▇▇▇▇ 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) Neither the Company nor any of the ▇▇▇▇▇▇ Companies
nor any properties owned or operated by the Company or any of the
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Companies threatened, relating to the
liability of any property owned or operated by the Company or any of
the ▇▇▇▇▇▇ 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
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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.
(xxix) The Company and the ▇▇▇▇▇▇ Companies have filed all
federal income and state and local 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.
(xxx) The Company has received approval, subject to
completion of the Conversion, to have the Securities quoted on the
National Market Tier of the Nasdaq Stock Market ("Nasdaq Stock Market")
effective as of the Closing Time referred to in Section 2 hereof.
(xxxi) 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
has requested that such registration statement be effective concurrent
with the effectiveness of the Registration Statement.
(xxxii) 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
which is not described or filed as required.
(xxxiii) The Company and each of the ▇▇▇▇▇▇ 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.
(xxxiv) Except as described in the Prospectus, there are no
contractual encumbrances or 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 ▇▇▇▇▇▇
Companies (A) to pay any indebtedness owed to the Company or any of the
▇▇▇▇▇▇ Companies, or (B) to make any loans or advances to, or
investments in, the Company or any of the ▇▇▇▇▇▇ Companies, or (C) to
transfer any of its property or assets to the Company or any of the
▇▇▇▇▇▇ Companies.
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(b) Any certificate signed by any officer of the Company or ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Mutual to the
Agent as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER ▇'▇▇▇▇▇; 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 ▇'▇▇▇▇▇ 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 ▇'▇▇▇▇▇
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, regulations, decisions or orders. The services to be rendered
by Sandler ▇'▇▇▇▇▇ 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
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 preparation and filing of such
documents is the sole responsibility of the Company and ▇▇▇▇▇▇ Mutual and their
counsel); (iv) assisting in the design and implementation of a marketing
strategy for the Offerings; (v) assisting the Company and ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Mutual, Sandler ▇'▇▇▇▇▇ 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 ▇'▇▇▇▇▇ will endeavor to limit the aggregate fees to be paid
by the Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇'▇▇▇▇▇ and Selected Dealers shall not exceed 7% of the
aggregate Purchase Price of the Securities sold by such Selected Dealers. Sander
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▇'▇▇▇▇▇ 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
▇'▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 First Union National Bank 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
__________ offices of _________________________, at 10:00 a.m., local 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) two percent (2%) 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 ▇▇▇▇▇▇
Mutual established for the benefit of their respective directors, officers and
employees, and (ii) any director, officer or employee of the Company or ▇▇▇▇▇▇
Mutual or members of their immediate families (which term shall mean parents,
grandparents, spouse, siblings, children and grandchildren); and
(b) with respect to any Securities sold by an NASD member firm
(other than Sandler ▇'▇▇▇▇▇) under the Selected Dealers' Agreement in the
Syndicated Community Offering, (i)
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the compensation payable to Selected Dealers under any Selected Dealers'
Agreement, (ii) any sponsoring dealer's fees; and (iii) a management fee to
Sandler ▇'▇▇▇▇▇ of one and one-half percent (1.5%). Any fees payable to Sandler
▇'▇▇▇▇▇ for Securities sold by Sandler ▇'▇▇▇▇▇ under any such agreement shall be
limited to an aggregate of two percent (2%) of the Aggregate Purchase Price of
such Securities, and the aggregate fees payable to Sandler ▇'▇▇▇▇▇ 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 ▇'▇▇▇▇▇; 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual covenant with
the Agent as follows:
(a) The Company and ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual prepared by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co. The
Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual will give the Agent notice
of its intention to file or prepare any amendment to the Conversion Application
or Registration Statement (including
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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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual will comply, at their own expense, with
all requirements imposed upon them by the Department, by the ConversionAct, as
from time to time in force, and by 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, in the opinion of counsel for the Agent, 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual
will each furnish such information with respect to itself as the Agent may from
time to time reasonably request.
(f) The Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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.
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(g) The Company authorizes Sandler ▇'▇▇▇▇▇ 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 fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and the ▇▇▇▇▇▇
Companies for such quarter in reasonable detail. In addition, such annual report
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 information concerning the Company as the Agent may
reasonably request.
(k) The Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual by the Department.
(l) The Company and ▇▇▇▇▇▇ 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 reports on
Form SR 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.
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(n) The Company will file with the Nasdaq Stock Market all
documents and notices required by the Nasdaq Stock Market of companies that have
issued securities that are traded in the over-the-counter market and quotations
for which are reported by the Nasdaq Stock Market.
(o) The Company and ▇▇▇▇▇▇ 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 later of the third 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,
respectively, neither the Company nor ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Common Stock
becoming subject to any security interest, mortgage, pledge, lien or
encumbrance.
(r) The Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual have satisfied each condition set forth in Section 5
hereof, unless such condition is waived by the Agent.
(t) The Company or ▇▇▇▇▇▇ Mutual will furnish to Sandler
▇'▇▇▇▇▇ as early as practicable prior to the delivery of the letters to be
furnished by KPMG Peat Marwick 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 ▇▇▇▇▇▇ Mutual and the Subsidiaries which have been read by KPMG Peat Marwick
LLP, as stated in their letters to be furnished pursuant to subsections (e) and
(f) of Section 5 hereof.
SECTION 4. PAYMENT OF EXPENSES.
The Company and ▇▇▇▇▇▇ 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 printing and filing of the Registration
Statement 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 ▇▇▇▇▇▇ 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
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connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Agent 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, (vii) the 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 ▇▇▇▇▇▇ Mutual or the Company, ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Mutual or the Company pursuant to this Section without the prior approval
of ▇▇▇▇▇▇ Mutual.
The Company and ▇▇▇▇▇▇ 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 $75,000. 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Mutual herein contained as of the date hereof and the Closing Time, to the
accuracy of the statements of officers and directors of the Company and ▇▇▇▇▇▇
Mutual made pursuant to the provisions hereof, to the performance by the Company
and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ & ▇▇▇, counsel for the Company and ▇▇▇▇▇▇ Mutual, in form
and substance satisfactory to counsel for the Agent, to the effect
that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Pennsylvania with full corporate
power and authority to own, lease and operate its properties
and
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to conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is
in good standing in each other 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 upon the financial condition, results of
operations or business affairs of the Company and the ▇▇▇▇▇▇
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 ▇▇▇▇▇▇
Companies.
(iii) ▇▇▇▇▇▇ 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 States of Pennsylvania and New Jersey; MIC 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 State of New Jersey;
the Company and each of the ▇▇▇▇▇▇ Companies has obtained all
licenses, permits and other governmental authorizations
currently required for the conduct of their respective
businesses.
(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, issue 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, to the best of their knowledge and
information, otherwise.
(vi) Upon consummation of the Conversion, the
authorized, issued and outstanding capital stock of the
Company will be as 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 ▇▇▇▇▇▇ Mutual,
directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(viii) Upon consummation of the Conversion, all
of the issued and outstanding capital stock of ▇▇▇▇▇▇ Mutual
when issued and delivered pursuant to the Plan against payment
of consideration as set forth in the Plan and set forth in the
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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 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 action on the part of each of the Company and ▇▇▇▇▇▇
Mutual, and this Agreement constitutes the legal, valid and
binding agreement of each of the Company and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 conflict with or 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 ▇▇▇▇▇▇ Companies considered as one enterprise, upon any
property or assets of the Company or any of the ▇▇▇▇▇▇
Companies pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company or any of the ▇▇▇▇▇▇ Companies is a party or by which
any of them may be bound, or to which any of the property or
assets of the Company or any of the ▇▇▇▇▇▇ Companies is
subject.
(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.
(xi) 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 and statistical data included therein, as
to which no opinion need be rendered) complied as to form in
all
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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,
there are no legal or governmental proceedings pending or
threatened against or affecting the Company or any of the
▇▇▇▇▇▇ Companies which are required, individually or in the
aggregate, to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein, and all
pending legal or governmental proceedings to which the Company
or any of the ▇▇▇▇▇▇ 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," "The Conversion--Tax Effects," "Certain
Restrictions on Acquisition of the Company" and "Description
of 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, the
descriptions thereof or references thereto are correct, and no
default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default, in the
due performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument so
described, referred to or filed.
(xvii) The Conversion Application complies 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. The Plan has been duly
authorized by all necessary actions, and all necessary
consents thereto and approvals thereof have been obtained and
the Conversion has been consummated; ▇▇▇▇▇▇ Mutual's charter
has been amended to authorize the issuance of permanent
capital stock; to the best of such counsel's knowledge, the
Company and ▇▇▇▇▇▇ 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 thereunder, including all
material applicable terms, conditions, requirements and
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conditions precedent to the Conversion imposed upon the
Company or ▇▇▇▇▇▇ Mutual by the Department 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 ▇▇▇▇▇▇
Companies is in violation of its charter (and ▇▇▇▇▇▇ Mutual
will not be in violation of its charter upon consummation of
the Conversion) 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 to
which the Company or any of the ▇▇▇▇▇▇ Companies is a party or
by which the Company or any of the ▇▇▇▇▇▇ Companies or any of
their property may be bound.
(xix) The Company is not 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 such matters as
the Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l)
and (b)(2), respectively, of this Section, ▇▇▇▇▇▇▇ & ▇▇▇ and Lord,
Bissell & Brook shall each additionally state that 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, ▇▇▇▇▇▇▇ & ▇▇▇ and Lord, Bissell & Brook may
rely as to matters of fact on certificates of officers and directors of
the Company and ▇▇▇▇▇▇ Mutual and certificates of public officials,
which opinions shall be in form and substance satisfactory to counsel
for the Agent, and Lord, Bissell & Brook may also rely on the opinion
of ▇▇▇▇▇▇▇ & ▇▇▇ regarding matters of Pennsylvania law.
(c) At Closing Time referred to in Section 2, the Plan shall
have been approved by the policyholders of ▇▇▇▇▇▇ Mutual and ▇▇▇▇▇▇
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
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the Company or ▇▇▇▇▇▇ 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 date
hereof or 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 ▇▇▇▇▇▇ 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 Chief Executive
Officer of the Company and of ▇▇▇▇▇▇ Mutual, the President of the
Company and ▇▇▇▇▇▇ Mutual and the chief financial or chief accounting
officer of the Company and of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Mutual from the latest date as of which the financial
condition of the Company or ▇▇▇▇▇▇ Mutual as 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 ▇▇▇▇▇▇ Mutual shall
have received from the Department any direction (oral or written) to
make any material change in the method of conducting its business with
which it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect
the business, financial condition or results of operations of the
Company or ▇▇▇▇▇▇ Mutual, (iv) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (v) the Company
and ▇▇▇▇▇▇ Mutual have complied with all agreements and satisfied 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 Peat Marwick 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 ▇▇▇▇▇▇ Companies within the meaning of the Code of
Ethics of the American Institute of Certified Public Accountants, 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 Peat Marwick
set forth in detail in such letter, nothing has come to their attention
which causes them to believe that (A) the unaudited financial
statements and supporting schedules of the ▇▇▇▇▇▇ 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
-22-
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and the Conversion Act or are not presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus, (B) the
unaudited pro forma consolidated financial data of the Company included
in the Registration Statement is not fairly presented on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement, or that such unaudited pro
forma consolidated financial data has not been properly compiled on the
pro forma basis described therein, or that the pro forma adjustments
were not properly applied to the applicable historical combined
financial statements, (C) at a specified date not more than five days
prior to the date of this Agreement, there has been any increase in the
consolidated long term or short term debt of the ▇▇▇▇▇▇ Companies or
any decrease in consolidated total assets or net worth of the ▇▇▇▇▇▇
Companies, in each case as compared with the amounts shown in the
December 31, 1996 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Companies identified in such letter.
(f) At Closing Time, the Agent shall have received from KPMG
Peat Marwick 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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Company, 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 satisfactory in
form and substance to the Agent and counsel for the Agent.
-23-
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(j) The Internal Revenue Service shall have provided a private
letter ruling, or ▇▇▇▇▇▇▇ & ▇▇▇ shall have provided an opinion, to the
Insurance Companies, in each case, as described under the caption "The
Conversion -- Tax Effects" in the Prospectus.
(k) 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 the effect of which it,
in the judgment of the Agent, are 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 American Stock Exchange 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
Exchanges 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 ▇▇▇▇▇▇ Mutual, jointly and severally,
agree to indemnify and hold harmless the Agent, 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, 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, related to or
arising out of the Conversion or any action taken by the Agent where
acting as agent of the Company or ▇▇▇▇▇▇ 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 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,
-24-
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if such settlement is effected with the written consent of the Company
or ▇▇▇▇▇▇ Mutual, which consent shall not be unreasonably withheld; 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 ▇▇▇▇▇▇ Mutual by the Agent expressly for
use in the Prospectus (or any amendment or supplement thereto).
(b) The Agent agrees to indemnify and hold harmless the
Company, ▇▇▇▇▇▇ Mutual, their directors and trustees, each of their officers who
signed the Registration Statement, 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.
(d) The Company and ▇▇▇▇▇▇ Mutual also agree that the Agent
shall not have any liability (whether direct or indirect, in contract or tort or
otherwise) to ▇▇▇▇▇▇ Mutual, the Company, its security holders or ▇▇▇▇▇▇
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 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.
-25-
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(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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 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 of the Company, each trustee of ▇▇▇▇▇▇ Mutual, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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.
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 ▇▇▇▇▇▇
Mutual submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any
-26-
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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 date of this Agreement or 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
▇▇▇▇▇▇ Mutual, or the Company and the ▇▇▇▇▇▇ 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 the effect of which, in the judgment of the
Agent, are 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 either the American
Stock Exchange or the 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 Exchanges 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 ▇▇▇▇▇▇ Mutual or the prospective market
for the Company's securities as 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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co. is not reasonable or equitable under then
prevailing market conditions, or (vii) if the Conversion is not consummated on
or prior to ____________________, 1998.
(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 Two World Trade Center, 104th Floor, New York, New York 10048, attention of
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Principal (with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Lord,
Bissell & Brook, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 60603); notices to the
Company and ▇▇▇▇▇▇ Mutual shall be directed to either of them at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
President (with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ & ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ 19087).
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SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Agent, the Company and ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 October 23, 1997, by and between the Agent and the
Company and ▇▇▇▇▇▇ Mutual, relating to the Agent's providing conversion agent
services to the Company and ▇▇▇▇▇▇ 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.
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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 ▇▇▇▇▇▇ Mutual in accordance with
its terms.
Very truly yours,
▇▇▇▇▇▇ INSURANCE GROUP, INC.
By:__________________________________________
Title:_______________________________________
▇▇▇▇▇▇ MUTUAL INSURANCE COMPANY
By:__________________________________________
Title:_______________________________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
By: Sandler ▇'▇▇▇▇▇ & Partners Corp.,
the sole general partner
By:_______________________________
Title:____________________________
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