Exhibit B
SUBSCRIPTION AGREEMENT
Utilities Mutual Insurance Company
0 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Dear Sirs:
The undersigned is a policyholder of and holder of equitable shares in
Utilities Mutual Insurance Company (the "Company"), a mutual insurance company
which is currently in the process of obtaining the approval of the
Superintendent of Insurance of New York State (the "Superintendent") to convert
to stock company status ("demutualization"). It is contemplated that immediately
upon demutualization a holding company will be formed under New York law (the
"Holding Company") and all then shareholders of the Company will exchange their
stock in the Company for shares of stock in the Holding Company with the result
that the Company will become a wholly-owned subsidiary of the Holding Company.
Ownership of stock in the Holding Company will be in the same proportions as
ownership of the Company both before and immediately after demutualization. In
furtherance thereof, the undersigned agrees as follows:
1. Exchange and Subscription. Subject to the terms and conditions set
forth below, the undersigned, intending to be legally bound, hereby irrevocably
agrees that the Company, in lieu of issuing to it shares of common stock of the
Company to which it is entitled (i) pursuant to an order of demutualization for
the Company expected to be entered by the New York State Insurance Department,
and (ii) pursuant to assignments to it from its affiliated policy holders of the
Company (the "Assignors") as evidenced by resolution of Assignors attached
hereto as Exhibit A, hereby subscribes for shares of common stock (the "Stock")
of UMICO Holdings Inc., a New York corporation in such number as will represent
(together with Stock which would have been issued to its Assignors) the same
proportion of the total number of shares of common stock of the Holding Company
to be outstanding upon demutualization as the undersigned (together with Stock
which would have been issued to its Assignors) would be entitled with respect to
the Company upon demutualization.
2. Agreements. The undersigned further agrees:
(a) To vote all of its shares of Stock to elect the incumbent
directors of the Company as directors of the Holding Company.
The undersigned further agrees that in the event of any future vacancy on
the Board of Directors of the Holding Company,
it will vote all of its shares of Stock for a person nominated by the company
whose employee or designee previously filled that vacant seat.
(b) To vote all of its shares of Stock to elect the following
persons to the officerships of the Holding Company set forth below:
Xxxx Xxxx Chairman of the Board
Xxxx Xxxxxx President & CEO
Xxxx X. Xxxxxx Treasurer
Xxxxxxx Xxxxx Secretary
(c) To vote all of its shares of Stock for the adoption of by-laws
for the Holding Company providing that the power to elect 13 directors of the
Company shall reside in the President of the Holding Company on behalf of the
Holding Company as sole shareholder of the Company. It is understood that the
President of the Holding Company will exercise this authority to re-elect the
current directors of the Company and as provided in Section 2(a) above.
(d) Except as provided in this paragraph (d), and except to
companies it controls or control it, or is under common control with (each, an
"affiliate transaction"), the undersigned shall not sell, assign, transfer,
hypothecate or otherwise dispose of the Stock. Except in the case of an
affiliate transaction, in the event that the undersigned receives a bona fide
offer for the purchase of the Stock, it will offer such Stock to the Holding
Company at the same price as is provided in the bona fide offer received. Such
offer shall remain open for 30 days. If the Holding Company shall, within such
30 day period, accept such offer, it shall pay for such Stock in cash, within 30
days of the closing of the purchase. In the event that the Holding Company is
unwilling or legally unable to purchase such Stock, the Holding Company shall so
notify the undersigned within the 30-day period referred to above, and the
undersigned shall offer such Stock to all of the other stockholders of the
Holding Company at the same price, pro rata to their ownership of Stock in the
Holding Company. For a 30-day period from the date of such offer, such
stockholders shall have the right, but not the obligation, to purchase such
Stock in the proportion so offered, or in such other proportion that they shall
mutually agree. Payment for the Stock shall be made to the undersigned within 30
days of the closing of the purchase. The undersigned shall be free to sell
pursuant to the terms of the bona fide offer any Stock not purchased from it as
above provided. Notwithstanding the above, no entity shall either directly or
indirectly (through a purchase by the Holding Company) become an owner of in
excess of 10% of the Stock prior to receipt of approval of such holding by the
Superintendent.
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The agreement contained in this paragraph (d) shall survive until the closing of
a transaction, approved by stockholders of the Holding Company, for the sale of
the Company and/or the Holding Company or substantially all its assets.
(e) The undersigned agrees that if holders of more than 66 2/3% of
the Stock shall agree to the sale of their Stock to a third party, the
undersigned will sell its Stock to such third party on the same terms and
conditions and for the same price. The undersigned hereby irrevocably
constitutes and appoints the Chairman of the Board of the Holding Company as its
attorney in fact to transfer its Stock on the books of the Holding Company for
purposes of any transfer of Stock required by the undersigned pursuant to the
preceding sentence.
(f) The undersigned will comply with all reporting requirements
applicable to it under New York Insurance Law.
(g) The undersigned agrees that pending issuance of its shares of
Stock to the undersigned, the Holding Company may hold, in trust for the
exclusive benefit of the undersigned, any dividend or other distribution
declared and paid by the Holding Company on its Stock, and to pay over to the
undersigned any such amounts simultaneously with the issuance of Stock to the
undersigned.
3. Representations and Warranties. The undersigned hereby represents
and warrants that:
(a) The undersigned is fully familiar with the affairs of the Company and
the Holding Company.
(b) The undersigned understands and agrees that the Stock cannot be
transferred without compliance with the terms of this Agreement. The Stock is
not registered under the Securities Act of 1933 (the "Securities Act") or any
state securities laws. The undersigned must bear the economic risk of the
investment indefinitely because the Stock may not be sold, hypothecated or
otherwise disposed of unless registered under the Securities Act and applicable
state securities laws or an exemption from registration is available. Legends
shall be placed on the certificates for the Stock to the effect that they have
not been registered under the Securities Act or applicable state securities laws
and appropriate notations thereof will be made in the Holding Company's stock
books.
(c) The undersigned is acquiring the Stock for its own account, for
investment purposes only, and not with a view to the sale or other distribution
thereof, in whole or in part.
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(d) This Agreement has been duly authorized, executed and delivered by
the undersigned and upon the undersigned's receipt of a required order from the
Securities and Exchange Commission under the Public Utility Holding Company Act
of 1935, as amended ("PUHCA"), will constitute the valid and legally binding
obligation of the undersigned. The execution and performance of the terms and
obligations of this Agreement will not (upon receipt of the aforesaid
authorization under the PUHCA) cause the undersigned to violate any judgment,
order, law, ordinance or rule, or any agreement or indenture, to which the
undersigned or the undersigned's property, is subject.
4. Irrevocability; Binding Effect. The undersigned hereby acknowledges and
agrees that its subscription and exchange agreement hereunder is irrevocable by
the undersigned, except as required by applicable law including, without
limitation, the PUHCA, and that this Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns.
5. Modification. This Agreement shall not be modified or waived except by
an instrument in writing signed by the party against whom any such modification
or waiver is sought.
6. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered by nationally recognized courier service
against receipt to the party to whom it is to be given (a) if to the Company or
the Holding Company, at the address set forth above, or (b) if to the
undersigned, at the address set forth on the signature page hereof (or, in
either case, to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 6). Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
7. Assignability. This Agreement and the rights, interests and obligations
hereunder are not transferable or assignable by the undersigned (except upon the
express written consent of the Company and the Holding Company) and the
undersigned further agrees that the transfer or assignment of the Stock shall be
made only in accordance with the terms of this Agreement and all applicable
laws.
8. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to its
conflicts of laws principles. The undersigned hereby irrevocably submits to the
jurisdiction of any New York State or United States Federal court sitting in New
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York County over any action or proceeding arising out of or relating to this
Agreement or any agreement contemplated hereby, and the undersigned hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. The undersigned
further waives any objection to venue in such state on the basis of a
non-convenient forum. The undersigned further agrees that any action or
proceeding brought against the Company shall be brought only in New York State
or United States Federal courts sitting in New York County. THE UNDERSIGNED
AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.
9. Miscellaneous.
(a) The terms and provisions of this Agreement may be waived, or
consent for the departure therefrom granted, only by a written document executed
by the party entitled to the benefits of such terms or provision.
(b) The undersigned's representations and warranties made in this
Agreement shall survive the execution and delivery hereof and of the Stock of
the Holding Company.
(c) This Agreement may be executed in one or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
(d) Each provision of this Agreement shall be considered separable
and if for any reason any provision or provisions hereof are determined to be
invalid or contrary to applicable law, such invalidity shall not impair the
operation of or affect the remaining portions of this Agreement.
(e) Paragraph titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement this ----
day of January, 2000.
GPU, INC.
By:
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Title
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[address]
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