-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Akuc7sYIWVvdfetJ+l9jaJoDT6905XMzG5wfdDZQemWe/UBclDAs4PF/1JSIPEJO rQ80PTh/8luwUavKPUXz2w== 0001002105-02-000146.txt : 20021114 0001002105-02-000146.hdr.sgml : 20021114 20021114164132 ACCESSION NUMBER: 0001002105-02-000146 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILB ROGAL & HAMILTON CO /VA/ CENTRAL INDEX KEY: 0000814898 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 541194795 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15981 FILM NUMBER: 02825496 BUSINESS ADDRESS: STREET 1: THE HILB, ROGAL AND HAMILTON BUILDING STREET 2: 4951 LAKE BROOK DRIVE, SUITE 500 CITY: GLEN ALLEN STATE: VA ZIP: 23060 BUSINESS PHONE: 8047476500 MAIL ADDRESS: STREET 1: P O BOX 1220 CITY: GLEN ALLEN STATE: VA ZIP: 23060 10-Q 1 form10q.txt FORM 10-Q FOR QUARTER ENDING SEPTEMBER 30, 2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 2002 Commission file number 0-15981 HILB, ROGAL AND HAMILTON COMPANY (Exact name of registrant as specified in its charter) Virginia 54-1194795 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 4951 Lake Brook Drive, Suite 500, Glen Allen, VA 23060 (Address of principal executive offices) (Zip Code) (804) 747-6500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 1, 2002 -------------------------- ------------------------------- Common stock, no par value 29,422,983 HILB, ROGAL AND HAMILTON COMPANY INDEX Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements Statement of Consolidated Income for the three months and nine months ended September 30, 2002 and 2001 ....................... 3 Consolidated Balance Sheet, September 30, 2002 and December 31, 2001 ................... ............................ 4 Statement of Consolidated Shareholders' Equity for the nine months ended September 30, 2002 and 2001 ............................. 5 Statement of Consolidated Cash Flows for the nine months ended September 30, 2002 and 2001 ....................................... 6 Notes to Consolidated Financial Statements ............................................7-15 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...................... 16-21 Item 3. Qualitative and Quantitative Disclosures About Market Risk ............................. 21 Item 4. Controls and Procedures ....................... 21 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............21-22 Signatures ................................................................. 23 Certifications ...........................................................24-25 2 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED INCOME HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2002 2001 2001 2002 ---- ---- ---- ---- Revenues Commissions and fees $126,834,193 $86,322,607 $320,221,578 $237,627,788 Investment income 632,848 682,198 1,606,477 1,978,585 Other 1,023,301 604,672 2,233,361 3,704,445 --------- ------- --------- ----------- 128,490,342 87,609,477 324,061,416 243,310,818 Operating expenses Compensation and employee benefits 69,794,938 47,362,028 175,848,657 132,885,941 Other operating expenses 21,923,639 15,699,868 56,479,205 44,114,833 Depreciation 1,997,753 1,686,561 5,438,196 4,706,904 Amortization of intangibles 1,919,575 3,490,364 3,004,173 10,260,966 Interest expense 3,785,927 2,392,443 7,488,537 7,052,015 --------- --------- --------- --------- 99,421,832 70,631,264 248,258,768 199,020,659 ---------- ---------- ----------- ----------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 29,068,510 16,978,213 75,802,648 44,290,159 Income taxes 11,819,609 7,300,745 30,868,020 19,044,881 ---------- --------- ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 17,248,901 9,677,468 44,934,628 25,245,278 Cumulative effect of accounting change, net of tax - - 3,944,484 - ----------- --------- --------- ---------- NET INCOME $ 17,248,901 $ 9,677,468 $ 48,879,112 $ 25,245,278 ============ =========== ============ ============ Net Income Per Share - Basic: Income before cumulative effect of accounting change $0.59 $0.35 $1.58 $0.93 Cumulative effect of accounting change, net of tax - - 0.13 - ----- ----- ----- ----- Net income $0.59 $0.35 $1.71 $0.93 ===== ===== ===== ===== Net Income Per Share - Assuming Dilution: Income before cumulative effect of accounting change $0.53 $0.31 $1.41 $0.84 Cumulative effect of accounting change, net of tax - - 0.12 - ----- ----- ----- ----- Net income $0.53 $0.31 $1.53 $0.84 ===== ===== ===== =====
See notes to consolidated financial statements. 3 CONSOLIDATED BALANCE SHEET HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES
SEPTEMBER 30, DECEMBER 31, 2002 2001 ---- ---- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $114,077,275 $ 51,580,095 Investments 1,636,959 3,499,421 Receivables: Premiums and commissions, less allowance for doubtful accounts of $5,398,342 and $3,374,285, respectively 161,204,177 116,219,367 Other 37,966,570 17,672,780 ------------ ------------ 199,170,747 133,892,147 Prepaid expenses and other current assets 10,432,202 8,435,944 ------------ ------------ TOTAL CURRENT ASSETS 325,317,183 197,407,607 INVESTMENTS 1,200,608 1,335,798 PROPERTY AND EQUIPMENT, NET 20,324,803 19,484,705 GOODWILL 406,073,766 286,554,839 OTHER INTANGIBLE ASSETS 89,676,884 33,516,884 Less accumulated amortization 56,543,312 53,821,407 ------------ ------------ 439,207,338 266,250,316 OTHER ASSETS 12,498,317 9,764,122 ------------ ------------ $798,548,249 $494,242,548 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Premiums payable to insurance companies $247,931,323 $169,501,575 Accounts payable 9,027,972 7,303,804 Accrued expenses 42,226,966 20,302,435 Premium deposits and credits due customers 31,972,137 20,940,410 Current portion of long-term debt 5,515,326 6,996,423 ------------ ------------ TOTAL CURRENT LIABILITIES 336,673,724 225,044,647 LONG-TERM DEBT 220,716,831 114,443,224 OTHER LONG-TERM LIABILITIES 22,983,300 11,953,338 SHAREHOLDERS' EQUITY Common Stock, no par value; authorized 50,000,000 shares; outstanding 29,376,583 and 28,310,568 shares, respectively 89,589,974 55,542,485 Retained earnings 129,775,732 88,604,274 Accumulated other comprehensive income (loss): Unrealized loss on derivative contracts, net of deferred tax benefit of $1,074,000 and $955,000, respectively (1,611,387) (1,433,296) Other 420,075 87,876 ------------ ------------ 218,174,394 142,801,339 ------------ ------------ $798,548,249 $494,242,548 ============ ============
See notes to consolidated financial statements. 4 STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED)
ACCUMULATED OTHER COMMON RETAINED COMPREHENSIVE STOCK EARNINGS INCOME (LOSS) --------- -------- ------------- Balance at January 1, 2002 $55,542,485 $ 88,604,274 $(1,345,420) Issuance of 1,066,015 shares of Common Stock 34,047,489 Payment of dividends ($.2675 per share) (7,707,654) Net income 48,879,112 Derivative loss arising during 2002, net of tax (178,091) Other - - 332,199 ----------- ------------ ----------- Balance at September 30, 2002 $89,589,974 $129,775,732 $(1,191,312) =========== ============= =========== Balance at January 1, 2001 $22,361,312 $ 65,860,654 $ - Issuance of 1,609,906 shares of Common Stock 29,398,366 Purchase of 10,000 shares of Common Stock (211,080) Payment of dividends ($.26 per share) (7,127,647) Net income 25,245,278 Cumulative effect of accounting change related to derivatives, net of tax (516,600) Derivative loss arising during 2001, net of tax - - (1,141,745) ----------- ------------ ----------- Balance at September 30, 2001 $51,548,598 $ 83,978,285 $(1,658,345) =========== ============ ===========
See notes to consolidated financial statements. 5 STATEMENT OF CONSOLIDATED CASH FLOWS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2002 2001 ---- ---- OPERATING ACTIVITIES Net income $ 48,879,112 $ 25,245,278 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of accounting change, net of tax (3,944,484) - Depreciation 5,438,196 4,706,904 Amortization of intangible assets 3,004,173 10,260,966 ------------- ------------ Net income plus amortization, depreciation and cumulative effect of accounting change, net of tax 53,376,997 40,213,148 Provision for losses on accounts receivable 923,085 817,815 Provision for deferred income taxes 2,870,482 - Loss (gain) on sale of assets 115,181 (2,602,422) Changes in operating assets and liabilities net of effects from insurance agency acquisitions and dispositions: Increase in accounts receivable (14,079,469) (8,693,132) Increase in prepaid expenses (610,908) (164,355) Increase in premiums payable to insurance companies 14,555,086 5,882,996 Increase in premium deposits and credits due customers 11,020,726 4,912,293 Decrease in accounts payable (193,731) (1,315,156) Increase in accrued expenses 10,509,335 5,945,392 Other operating activities (3,592,385) 4,359,960 ------------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 74,894,399 49,356,539 INVESTING ACTIVITIES Proceeds from maturities of held-to-maturity investments 2,629,242 857,867 Purchase of investments (611,080) (692,034) Purchase of property and equipment (4,405,420) (3,684,278) Purchase of insurance agencies, net of cash acquired (105,559,164) (38,808,587) Proceeds from sale of assets 1,492,107 4,400,627 Other investing activities 576,857 912,518 ------------- ------------ NET CASH USED IN INVESTING ACTIVITIES (105,877,458) (37,013,887) FINANCING ACTIVITIES Proceeds from long-term debt 160,000,000 37,074,109 Principal payments on long-term debt (57,684,306) (20,810,603) Debt issuance costs (2,356,075) - Proceeds from issuance of Common Stock 1,228,274 2,484,325 Repurchase of Common Stock - (211,080) Dividends (7,707,654) (7,127,647) ------------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 93,480,239 11,409,104 ------------- ------------ INCREASE IN CASH AND CASH EQUIVALENTS 62,497,180 23,751,756 Cash and cash equivalents at beginning of period 51,580,095 28,880,784 ------------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 114,077,275 $ 52,632,540 ============= ============
See notes to consolidated financial statements. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE A--BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Hilb, Rogal and Hamilton Company (the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2002, are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2001. Certain amounts for the prior period have been reclassified to conform to current year presentation. NOTE B--CHANGES IN ACCOUNTING METHOD Effective January 1, 2002, the Company changed its method of accounting for commissions on premiums billed and collected directly by insurance carriers on its middle-market property and casualty business. Prior to 2002, this revenue was recognized when received. Beginning January 1, 2002, this revenue is recorded on the later of the billing date or the effective date, consistent with the revenue recognition policy for agency billed business. This is the predominant practice followed in the industry. Management believes that this new methodology is preferable and that it better matches the income with the related expenses. For the three months ended September 30, 2002, the effect of this change to net income was less than $5,000. For the nine months ended September 30, 2002, the effect of this change was to increase net income by $5.5 million ($0.17 per share), which included the cumulative effect adjustment of $3.9 million ($0.12 per share), net of income taxes of $2.6 million. No prior period pro forma amounts have been presented to reflect the effect of retroactive application of the change as it is not practical for the Company to compute prior period pro forma amounts due to the lack of prior period data. 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE C--INTANGIBLE ASSETS In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations" (Statement 141), and No. 142, "Goodwill and Other Intangible Assets" (Statement 142). Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Statement 141 also included guidance on the initial recognition and measurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001. Under Statement 142, goodwill will no longer be amortized but will be subject to annual impairment tests. Intangible assets with finite lives will continue to be amortized over their useful lives. The Company adopted Statement 142 effective January 1, 2002. The Company has tested goodwill for impairment using the two-step process prescribed in Statement 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. The Company completed the first of the required impairment tests of goodwill as of January 1, 2002. No impairment charge resulted from this test. The following table provides a reconciliation of the September 30, 2002 and 2001 reported net income to adjusted net income had Statement 142 been applied as of January 1, 2001.
For the Three Months Ended For the Nine Months Ended September 30, September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Net Income - as reported $17,248,901 $ 9,677,468 $48,879,112 $25,245,278 Goodwill amortization, net of tax - 2,202,702 - 6,271,256 ----------- ------------ ----------- ----------- Adjusted net income $17,248,901 $11,880,170 $48,879,112 $31,516,534 =========== ============ ============ =========== Net Income Per Share - Basic: Net income - as reported $0.59 $0.35 $1.71 $0.93 Goodwill amortization, net of tax - 0.07 - 0.23 ------ ------ ----- ----- Adjusted net income $0.59 $0.42 $1.71 $1.16 ====== ====== ===== ===== Net Income Per Share - Assuming Dilution: Net income - as reported $0.53 $0.31 $1.53 $0.84 Goodwill amortization, net of tax - 0.07 - 0.21 ------ ------ ----- ----- Adjusted net income $0.53 $0.38 $1.53 $1.05 ====== ====== ===== =====
8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE C--INTANGIBLE ASSETS-Continued Intangible assets consist of the following:
As of September 30, 2002 As of December 31, 2001 ------------------------ ----------------------- Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount Amortization ------ ------------ ------ ------------ Amortizable intangible assets: Acquired identifiable intangibles $55,000,000 $ 1,375,000 $ - $ - Non-compete agreements 29,227,000 7,503,000 27,932,000 6,138,000 Expiration rights 4,950,000 4,696,000 5,085,000 4,601,000 Tradename 500,000 68,000 500,000 53,000 ----------- ----------- ----------- ----------- Total $89,677,000 $13,642,000 $33,517,000 $10,792,000 =========== =========== =========== =========== Indefinite-lived intangible assets: Goodwill, net $363,172,000 $243,526,000
The acquired identifiable intangibles relate to the Hobbs Group, LLC acquisition (see Note E). Aggregate amortization expense for the nine months ended September 30, 2002 and 2001 was $3,004,000 and $10,261,000, respectively. Estimated amortization expense: For year ended December 31, 2002 $4,956,000 For year ended December 31, 2003 7,519,000 For year ended December 31, 2004 7,411,000 For year ended December 31, 2005 7,355,000 For year ended December 31, 2006 7,345,000 For year ended December 31, 2007 7,342,000 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE C--INTANGIBLE ASSETS-Continued The changes in the net carrying amount of goodwill for the nine months ended September 30, 2002, are as follows: Balance as of December 31, 2001 $243,526,000 Goodwill acquired 120,728,000 Goodwill disposed (1,082,000) ------------- Balance as of September 30, 2002 $363,172,000 ============ NOTE D--INCOME TAXES Deferred taxes result from temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. The Company's effective rate varies from the statutory rate primarily due to state income taxes and non-deductible amortization. NOTE E--ACQUISITIONS On July 1, 2002 the Company acquired all of the issued and outstanding membership interest units of Hobbs Group, LLC ("Hobbs") other than those owned by Hobbs IRA Corp. ("HIRAC"), and all of the issued and outstanding capital stock of HIRAC pursuant to a Purchase Agreement, dated May 10, 2002, by and among the Company, Hobbs, the members of Hobbs (other than HIRAC) and the shareholders of HIRAC. Hobbs is an insurance broker serving upper middle-market and top-tier clients and provides property and casualty insurance brokerage, risk management and executive and employee benefits services. This acquisition allows the Company to expand its capabilities in the upper middle-market and top-tier businesses. In addition, Hobbs will provide the Company with additional market presence and expertise in the employee benefits services area and an increased presence into executive benefits. Hobbs will also bring increased depth to the geographic reach of the Company's existing national platform. 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE E--ACQUISITIONS-Continued The amount the Company paid in connection with the acquisition consisted of approximately $116.5 million in cash, which included acquisition costs of $2.3 million and the Company's assumption and retirement of certain debt of Hobbs, and the issuance to the members of Hobbs (other than HIRAC) and the shareholders of HIRAC of an aggregate of 719,729 shares of the Company's Common Stock ("Common Stock") valued at $31.6 million. The value of the 719,729 shares issued was determined based on the average market price of the Company's stock over the period including two days before and after the date at which the number of shares to be issued in accordance with the Purchase Agreement became fixed. In addition, the Company has agreed to pay up to approximately $101.9 million in cash and shares of Common Stock contingent on Hobbs achieving certain financial performance goals within the next two years. The Company has further agreed to assume and satisfy certain existing contingent earn-out and deferred compensation obligations of Hobbs from Hobbs' prior acquisitions estimated to approximate a net present value of $30 million. The contingent payments and assumed existing earn-outs will be recorded when their respective contingencies are resolved and consideration is paid. The assets and liabilities of Hobbs have been revalued to their respective estimated fair values. Intangible assets subject to amortization were estimated at $55.0 million with an estimated amortization period of 10 years. The excess purchase price over fair market value of the allocated assets and liabilities of $100.6 million was allocated to goodwill. The Company is in the process of obtaining a third-party valuation of certain intangible assets; thus, the allocation of the purchase price is preliminary and subject to refinement. The Company's financial statements include the results of Hobbs operations since the closing date of the acquisition. The following unaudited pro forma results of operations of the Company give effect to the acquisition of Hobbs as though the transaction had occurred on January 1, 2002 and 2001, respectively. 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE E--ACQUISITIONS-Continued
Three Months Ended Nine Months Ended September 30, September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Total Revenues $128,490,000 $107,943,000 $375,006,000 $308,227,000 Income before cumulative effect of accounting change and extraordinary item $ 17,249,000 $ 10,402,000 $ 47,395,000 $ 28,519,000 ============= ============= ============= ============= Net Income $ 17,249,000 $ 10,402,000 $ 50,929,000 $ 28,519,000 ============= ============= ============= ============= Income per share before cumulative effect of accounting change and extraordinary item: Basic $0.59 $0.36 $1.62 $1.02 ===== ===== ===== ===== Assuming Dilution $0.53 $0.33 $1.45 $0.93 ===== ===== ===== ===== Net Income Per Share: Basic $0.59 $0.36 $1.74 $1.02 ===== ===== ===== ===== Assuming Dilution $0.53 $0.33 $1.55 $0.93 ===== ===== ===== =====
The pro forma net income results for the nine months ended September 30, 2002 include a cumulative effect of accounting change of $3.9 million ($0.12 per share) related to the Company's change in revenue recognition policy (see Note B) and an extraordinary loss of $0.4 million ($0.01 per share) related to Hobbs' debt extinguishment. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE E--ACQUISITIONS-Continued In addition, the Company entered into a Second Amended and Restated Credit Agreement (the Amended Credit Agreement), dated as of July 1, 2002. The Amended Credit Agreement amends and restates an Amended and Restated Credit Agreement, dated as of April 6, 2001, and provides for a credit facility of up to an aggregate of $290.0 million. In particular, the Amended Credit Agreement maintains the availability to the Company of a revolving credit facility in the aggregate principal amount of $100.0 million and a term loan facility with an aggregate principal amount of $190.0 million. Pursuant to the Amended Credit Agreement, the increased term loan facility was made available to finance the cash payment in connection with the Hobbs acquisition and for working capital and general corporate purposes. During the first nine months of 2002, the Company also acquired certain assets and liabilities of five other insurance agencies for approximately $10,961,000 ($9,639,000 in cash and $1,322,000 in other guaranteed future payments) in purchase accounting transactions. The purchase price may be increased based on agency profitability per the contracts. These acquisitions are not material to the consolidated financial statements individually or in aggregate. NOTE F--SALE OF ASSETS AND OTHER GAINS During the nine months ended September 30, 2002 and 2001, the Company sold certain insurance accounts and other assets resulting in a loss of approximately $115,000 and a gain of $2,602,000, respectively, including a $94,000 gain and a $20,000 loss during the third quarters of 2002 and 2001, respectively. Revenues, expenses, assets and liabilities related to these dispositions were not material to the consolidated financial statements. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE G--NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Numerator for basic net income per share - net income $17,248,901 $ 9,677,468 $48,879,112 $25,245,278 Effect of dilutive securities: 5.25% convertible debenture 273,185 271,626 818,363 813,759 ----------- ----------- ----------- ----------- Numerator for dilutive net income per share - net income available after assumed conversions $17,522,086 $ 9,949,094 $49,697,475 $26,059,037 =========== =========== =========== =========== Denominator Weighted average shares 29,096,224 27,899,942 28,491,332 27,116,188 Effect of guaranteed future shares to be issued in connection with an agency acquisition 28,030 89,208 30,935 62,650 ----------- ----------- ----------- ----------- Denominator for basic net income per share 29,124,254 27,989,150 28,522,267 27,178,838 Effect of dilutive securities: Employee stock options 1,060,423 814,048 1,050,152 744,086 Employee non-vested stock 133,067 118,838 149,978 98,214 Contingent stock - acquisitions 39,480 56,126 33,073 34,810 5.25% convertible debenture 2,813,186 2,813,186 2,813,186 2,813,186 ----------- ----------- ----------- ----------- Dilutive potential common shares 4,046,156 3,802,198 4,046,389 3,690,296 ----------- ----------- ----------- ----------- Denominator for diluted net income per share - adjusted weighted average shares and assumed conversions 33,170,410 31,791,348 32,568,656 30,869,134 =========== =========== =========== =========== Net Income Per Share: Basic $0.59 $0.35 $1.71 $0.93 ===== ===== ===== ===== Assuming Dilution $0.53 $0.31 $1.53 $0.84 ===== ===== ===== =====
14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES September 30, 2002 (UNAUDITED) NOTE H--SUBSEQUENT EVENT In November 2002, pursuant to a Form S-3 registration statement filed with the Securities and Exchange Commission, the Company sold 1,150,000 shares of its Common Stock for net proceeds of approximately $41.2 million. The Company intends to use the proceeds to repay indebtedness, for acquisitions and for other general corporate purposes. Concurrent with this sale, The Phoenix Companies, Inc., agreed to convert all of the Company's Convertible Subordinated Debentures that it held into 2,813,186 shares of the Company's Common Stock. These debentures were included in the September 30, 2002 balance sheet at $29.0 million, net of discount, with a 5.25% interest rate and maturity date of 2014. In connection with the conversion, the Company amended the voting and standstill agreement with The Phoenix Companies, Inc. and its subsidiaries. 15 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On July 1, 2002 the Company acquired all of the issued and outstanding membership interest units of Hobbs Group, LLC ("Hobbs") other than those owned by Hobbs IRA Corp. ("HIRAC"), and all of the issued and outstanding capital stock of HIRAC pursuant to a Purchase Agreement, dated May 10, 2002, by and among the Company, Hobbs, the members of Hobbs (other than HIRAC) and the shareholders of HIRAC. The assets and liabilities of Hobbs have been revalued to their respective fair market values. Certain fair value estimates used in the determination of intangible assets are preliminary and are subject to refinement. The financial statements of the Company reflect the combined operations of the Company and Hobbs from the closing date of the acquisition. Results of Operations: - ---------------------- Three Months Ended September 30, 2002 Net income for the three months ended September 30, 2002 was $17.2 million, or $0.53 per share, compared with $9.7 million, or $0.31 per share for the comparable period last year. Excluding net non-recurring gains and adjusting amortization to a pro forma basis in 2001 as if the new accounting standards related to goodwill had been adopted as of January 1, 2001, net income was $17.2 million for the quarter, a 44.6% increase from $11.9 million last year. Net income per share on the same basis was $0.53, compared with $0.38 last year. See "Note C - Intangible Assets" of Notes to Consolidated Financial Statements. Commissions and fees were $126.8 million, an increase of 46.9% from commissions and fees of $86.3 million during the comparable period of the prior year. Approximately $32.7 million of commissions were derived from purchase acquisitions of new insurance agencies. This increase was offset by decreases of approximately $0.4 million from the sale of certain offices and accounts in 2002 and 2001. Excluding the effect of acquisitions and dispositions, commissions and fees increased 9.5%. This reflects new business production and continued industry-wide premium increases. Expenses for the quarter increased $28.8 million or 40.8%. Compensation and benefits, other operating expenses and depreciation expense increased $22.4 million, $6.2 million and $0.3 million, respectively, primarily due to purchase acquisitions of insurance agencies and increased revenue production. Amortization of intangibles decreased approximately $1.6 million due primarily to the adoption of Statement 142 partially offset by new amortization for intangibles acquired in the Hobbs transaction. Interest expense increased by $1.4 million due to increased borrowings, primarily related to the Hobbs acquisition. The Company's overall tax rate for the three months ended September 30, 2002 was 40.7% compared to 43.0% for the same period of the prior year. The decrease is primarily related to the non-amortization of goodwill resulting from the adoption of Statement 142. 16 Nine Months Ended September 30, 2002 For the nine months ended September 30, 2002, net income was $48.9 million, or $1.53 per share, compared to $25.2 million, or $0.84 per share last year. Excluding the effect of gains and the 2002 cumulative effect of an accounting change relating to revenue recognition and adjusting 2001 amortization to a pro forma basis, net income was $45.0 million, or $1.41 per share, up from $30.0 million or $1.00 per share a year ago. Commissions and fees were $320.2 million, an increase of 34.8% from commissions and fees of $237.6 million during the comparable period of the prior year. Approximately $60.6 million of commissions were derived from purchase acquisitions of new insurance agencies. This increase was offset by decreases of approximately $1.8 million from the sale of certain offices and accounts in 2002 and 2001. Commissions and fees, excluding the effect of acquisitions and dispositions, increased 10.0%. This increase principally reflects new business production and a continued strong rate environment. Investment income decreased $0.4 million, or 18.8%, primarily due to a lower interest rate environment. Other income decreased $1.5 million or 39.7% from the prior year primarily due to the net impact of nonrecurring gains from the sale of an agency in 2001, certain insurance accounts and other assets. Expenses increased by $49.2 million or 24.7%. Increases include $43.0 million in compensation and benefits, $12.4 million in other operating expenses and $0.7 million in depreciation expense, primarily due to purchase acquisitions of new insurance agencies and increased revenue production. Amortization of intangibles decreased approximately $7.3 million due primarily to the adoption of Statement 142. Interest expense increased by $0.4 million due to increased bank borrowings related primarily to the Hobbs acquisition, offset somewhat, by declines in interest rates. The Company's overall tax rate was 40.7% for the nine months ended September 30, 2002 compared to the rate of 43.0% for the nine months ended September 30, 2001. The decrease was primarily related to the non-amortization of goodwill resulting from adoption of Statement 142. Other For the three months ended September 30, 2002, net income as a percentage of revenues did not vary significantly from the three months ended June 30, 2002. Commission income was higher during the third quarter due to acquisitions during the quarter, primarily Hobbs. The timing of contingent commissions, policy renewals, acquisitions and dispositions may cause revenues, expenses and net income to vary significantly from quarter to quarter. As a result of the factors described above, operating results for the nine months ended September 30, 2002 should not be considered indicative of the results that may be expected for the entire year ending December 31, 2002. 17 Liquidity and Capital Resources: - -------------------------------- Net cash provided by operations totaled $74.9 million and $49.4 million for the nine months ended September 30, 2002 and 2001, respectively, and is primarily dependent upon the timing of the collection of insurance premiums from clients and payment of those premiums to the appropriate insurance underwriters. The Company has historically generated sufficient funds internally to finance capital expenditures for property and equipment. Cash expenditures for the acquisition of property and equipment were $4.4 million and $3.7 million for the nine months ended September 30, 2002 and 2001, respectively. The timing and extent of the purchase and sale of investments is dependent upon cash needs and yields on alternate investments and cash equivalents. The purchase of insurance agencies utilized cash of $105.6 million and $38.8 million in the nine months ended September 30, 2002 and 2001, respectively. Cash expenditures for such insurance agency acquisitions have been primarily funded through operations and long-term borrowings. In addition, a portion of the purchase price in such acquisitions may be paid through the Company's Common Stock and deferred cash payments. Cash proceeds from the sale of accounts and other assets amounted to $1.5 million and $4.4 million in the nine months ended September 30, 2002 and 2001, respectively. The Company did not have any material capital expenditure commitments as of September 30, 2002. Financing activities provided cash of $93.5 million and $11.4 million in the nine months ended September 30, 2002 and 2001, respectively. The Company has consistently made scheduled debt payments and annually increased its dividend rate. The Company is currently authorized to purchase 748,200 shares. The Company anticipates the continuance of its dividend policy. As of September 30, 2002, the Company had a bank credit agreement for $286.4 million under which loans are due in various amounts through 2007, including $152.4 million due in 2007, and 5.25% Convertible Subordinated Debentures with a $32.0 million face value due 2014. At September 30, 2002, there were loans of $186.4 million outstanding under the bank agreement, with $100.0 million available under the revolving portion of the facility for future borrowings. During the quarter, the Company signed the Second Amended and Restated Credit Agreement (Amended Credit Agreement). The new agreement amends and restates an Amended and Restated Credit Agreement dated April 6, 2001. The new agreement provides a $190.0 million term loan facility ($30.0 million of which was retained from the previous credit agreement) under which borrowings are due in various amounts through 2007 including $152.4 million due 2007. The Amended Credit Agreement also maintains the availability to the Company of a revolving credit facility in the aggregate principal amount of $100.0 million. The proceeds were used in part, to fund the cash portion of the Hobbs Group, LLC acquisition. The Amended Credit Agreement contains certain covenants that restrict, or may have the effect of restricting, the payment of dividends or distributions, and the purchase or redemption by the Company of its capital stock. Management does not believe that the restrictions contained in the Amended Credit Agreement will, in the foreseeable future, adversely affect the Company's ability to pay cash dividends at the current dividend rate. 18 In November 2002, pursuant to a Form S-3 registration statement filed with the Securities and Exchange Commission, the Company sold 1,150,000 shares of its Common Stock for net proceeds of approximately $41.2 million. The Company intends to use the proceeds to repay indebtedness, for acquisitions and for other general corporate purposes. Concurrent with this sale, The Phoenix Companies, Inc., agreed to convert all of the Convertible Subordinated Debentures that it held into 2,813,186 shares of the Company's Common Stock. These debentures were included in the September 30, 2002 balance sheet at $29.0 million, net of discount, with a 5.25% interest rate and maturity date of 2014. In connection with the conversion, the Company amended the voting and standstill agreement with The Phoenix Companies, Inc. and its subsidiaries. The Company had a current ratio (current assets to current liabilities) of 0.97 to 1.00 as of September 30, 2002. Shareholders' equity of $218.2 million at September 30, 2002, is improved from $142.8 million at December 31, 2001. The debt to equity ratio of 1.01 to 1.00 is increased from the ratio at December 31, 2001 of 0.80 to 1.00 due to increased borrowings offset, in part, by the issuance of Common Stock and increased net income. The Company believes that cash generated from operations, together with proceeds from borrowings, will provide sufficient funds to meet the Company's short and long-term funding needs. Business Acquisition - -------------------- On July 1, 2002 the Company acquired all of the issued and outstanding membership interest units of Hobbs other than those owned by HIRAC, and all of the issued and outstanding capital stock of HIRAC pursuant to a Purchase Agreement, dated May 10, 2002, by and among the Company, Hobbs, the members of Hobbs (other than HIRAC) and the shareholders of HIRAC. Hobbs, which is based in Atlanta, Georgia, is one of the nation's premier insurance brokers serving upper middle-market and top-tier clients and provides property and casualty insurance brokerage, risk management, and executive and employee benefits services. This acquisition allows the Company to expand its capabilities in the upper middle-market and top-tier businesses. In addition, Hobbs will provide the Company with additional market presence and expertise in the employee benefits services area and an increased presence in executive benefits. Hobbs will also bring increased depth to the geographic reach of the Company's existing national platform. The amount the Company paid in connection with the acquisition consisted of approximately $116.5 million in cash, which included acquisition costs of $2.3 million and the Company's assumption and retirement of certain debt of Hobbs, and the issuance to the members of Hobbs (other than HIRAC) and the shareholders of HIRAC of an aggregate of 719,729 shares of the Company's Common Stock valued at $31.6 million. In addition, the Company has agreed to pay up to approximately $101.9 million in cash and shares of Common Stock contingent on Hobbs achieving certain financial performance goals within the next two years. The Company has further agreed to assume and satisfy certain existing earn-out and deferred compensation obligations of Hobbs from Hobbs' prior acquisitions estimated to approximate a net present 19 value of $30 million. In addition, on July 1, 2002, the Company granted 625,000 stock options to key employees of Hobbs. The options have an exercise price equal to the fair market value at date of grant, expire in seven years and vest at a rate of 25% a year for four years. Market Risk - ----------- The Company has certain investments and utilizes (on a limited basis) derivative financial instruments which are subject to market risk; however, the Company believes that exposure to market risk associated with these instruments is not material. New Accounting Standard - ----------------------- The Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (Statement 142), effective January 1, 2002, which, among other things, ends the practice of amortizing goodwill. Net income for the three months and nine months ended September 30, 2001 would have increased by $0.07 and $0.21 per share, respectively, on a pro forma basis, assuming adoption of Statement 142 as of January 1, 2001. The Company has tested goodwill for impairment using the two-step process prescribed in Statement 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. The Company completed the first of the required impairment tests of goodwill as of January 1, 2002. No impairment charge resulted from this test. Change in Accounting Principle - ------------------------------ Effective January 1, 2002, the Company changed its method of accounting for commissions on premiums billed and collected directly by insurance carriers on its middle-market property and casualty business. Prior to 2002, this revenue was recognized when received. Beginning January 1, 2002, this revenue is recorded on the later of the billing date or the effective date, consistent with the revenue recognition policy for agency billed business. This is the predominant practice followed in the industry. Management believes that this new methodology is preferable and that it better matches the income with the related expenses. For the three months ended September 30, 2002, the effect of this change to net income was less than $5,000. For the nine months ended September 30, 2002, the effect of this change was to increase net income by $5.5 million ($0.17 per share), which included the cumulative effect adjustment of $3.9 million ($0.12 per share), net of income taxes of $2.6 million. No prior period pro forma amounts have been presented to reflect the effect of retroactive application of the change as it is not practical for the Company to compute prior period pro forma amounts due to the lack of prior period data. Forward-Looking Statements - -------------------------- The Company cautions readers that the foregoing discussion and analysis includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by that Act. These forward-looking statements are believed by the Company to be reasonable based upon management's current knowledge and assumptions about future events, but are subject to the uncertainties generally 20 inherent in any such forward-looking statement, including factors discussed above as well asother factors that may generally affect the Company's business, financial condition or operating results. Reference is made to the discussion of "Forward-Looking Statements" contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, regarding important risk factors and uncertainties that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied in any forward-looking statement made by or on behalf of the Company. Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth under the caption "Market Risk" in Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations. Item 4. CONTROLS AND PROCEDURES Within 90 days of the filing of this report on Form 10-Q, the Company's management, including the chief executive officer and the chief financial officer, performed an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Company's management, including the chief executive officer and chief financial officer, concluded that the Company's disclosure controls and procedures were effective as of that evaluation date. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation. PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit No. Document ----------- -------- 10.1 Amended and Restated Voting and Standstill Agreement, dated November 7, 2002, by and among the Company, The Phoenix Companies, Inc., Phoenix Life Insurance Company and PM Holdings, Inc. 99.1 Certification Statement of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 21 Exhibit No. Document ----------- -------- 99.2 Certification Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 b) Reports on Form 8-K Information required by this item was previously reported in the Company's Form 10-Q for the quarter ended June 30, 2002. 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hilb, Rogal and Hamilton Company -------------------------------- (Registrant) Date November 13, 2002 By: /s/Andrew L. Rogal --------------------------- ----------------------------------- Chairman and Chief Executive Officer (Principal Executive Officer) Date November 13, 2002 By: /s/Carolyn Jones --------------------------- ----------------------------------- Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date November 13, 2002 By: /s/Robert W. Blanton, Jr. --------------------------- ----------------------------------- Vice President and Controller (Chief Accounting Officer) 23 CERTIFICATIONS I, Andrew L. Rogal, Chief Executive Officer of Hilb, Rogal and Hamilton Company, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Hilb, Rogal and Hamilton Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/Andrew L. Rogal ------------------ -------------------------------------------- Andrew L. Rogal Chief Executive Officer 24 I, Carolyn Jones, Senior Vice President, Chief Financial Officer and Treasurer of Hilb, Rogal and Hamilton Company, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Hilb, Rogal and Hamilton Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/Carolyn Jones ------------------ -------------------------------------------- Carolyn Jones Senior Vice President, Chief Financial Officer and Treasurer 25 HILB, ROGAL AND HAMILTON COMPANY EXHIBIT INDEX Exhibit No. Document ----------- -------- 10.1 Amended and Restated Voting and Standstill Agreement, dated November 7, 2002, by and among the Company, The Phoenix Companies, Inc., Phoenix Life Insurance Company and PM Holdings, Inc. 99.1 Certification Statement of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 99.2 Certification Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 EX-10 3 exhibit10-1.txt EXHIBIT 10.1 Exhibit 10.1 AMENDED AND RESTATED VOTING AND STANDSTILL AGREEMENT THIS AMENDED AND RESTATED VOTING AND STANDSTILL AGREEMENT (the "Agreement"), dated as of November 7, 2002, is made by and among Hilb, Rogal and Hamilton Company, a Virginia corporation (the "Company"), The Phoenix Companies, Inc., a Delaware corporation ("Phoenix"), Phoenix Life Insurance Company (formerly known as Phoenix Home Life Mutual Insurance Company), a New York life insurance company ("Phoenix Life"), and PM Holdings, Inc., a Connecticut corporation ("Holdings"), and amends and restates the Voting and Standstill Agreement (the "Original Standstill Agreement") dated as of May 3, 1999, by and among the Company, Holdings and Phoenix Life. W I T N E S S E T H: WHEREAS, the Company, Holdings, Phoenix Life and Martin L. Vaughan, III entered into a Stock Purchase Agreement dated March 29, 1999 (the "Stock Purchase Agreement"), under which the Company agreed to acquire from Holdings and Martin L. Vaughan, III all of the issued and outstanding shares of the capital stock of American Phoenix Corporation, a Connecticut corporation; and WHEREAS, pursuant to the Stock Purchase Agreement, (i) Holdings acquired 1,730,084 shares of the Company's Common Stock (as hereinafter defined) and $22,000,000 principal amount of the Company's Subordinated Debentures (as hereinafter defined), and (ii) Phoenix Life acquired $10,000,000 principal amount of the Company's Subordinated Debentures; and WHEREAS, the Subordinated Debentures acquired by Holdings and Phoenix Life pursuant to the Stock Purchase Agreement are convertible into shares of Common Stock pursuant to the terms of the Subordinated Debentures; and WHEREAS, under the Original Standstill Agreement, the parties established certain rights and obligations in connection with the relationship of Holdings and Phoenix Life to the Company; and WHEREAS, Phoenix, which is the parent company of Phoenix Life, Phoenix Life and Holdings are currently effecting a series of transactions (the "Phoenix Transactions") that will result in the conversion of the Subordinated Debentures into shares of Common Stock and the sale or other disposition of all or substantially all of (i) the 1,730,084 shares of Common Stock acquired by Holdings pursuant to the Stock Purchase Agreement, (ii) the 2,813,186 shares of Common Stock into which the Subordinated Debentures are convertible and (iii) the 5,850 additional shares of Common Stock that Phoenix Life owns as of the date of this Agreement; and WHEREAS, in connection with the Phoenix Transactions, the parties to this Agreement desire to modify the rights and obligations that the Original Standstill Agreement established. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the Company, Phoenix, Phoenix Life and Holdings hereby agree as follows: ARTICLE I Definitions; Representations and Warranties ------------------------------------------- Section 1.1. Definitions. Except as otherwise specified herein, capitalized terms used in this Agreement shall have the respective meanings assigned to such terms in the Stock Purchase Agreement. For purposes of this Agreement, the following terms have the following meanings: (a) "Adjusted Outstanding Shares" shall mean, at any time and with respect to the determination of (i) the Phoenix Ownership Percentage as it relates to Phoenix and its Affiliates, (ii) the Standstill Percentage as it relates to Phoenix and its Affiliates, and (iii) any other percentage of the beneficial ownership of Common Stock as it relates to a Person or Group, the total number of shares of Common Stock then issued and outstanding. (b) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement, and, with respect to a determination of the Affiliates of Phoenix, shall include Phoenix Life and Holdings and any Affiliate of Phoenix Life or Holdings; provided, however, that (i) PXP and its subsidiaries and (ii) any Person registered as an investment company under the Investment Company Act of 1940, as amended, which might otherwise be deemed to be an "affiliate" of Phoenix or Phoenix Life within the meaning of Rule 12b-2 under the Exchange Act (a "Related Investment Company"), shall not be deemed to be Affiliates of Phoenix for purposes of this Agreement to the extent that their respective businesses consist principally of investing in securities, investment management and/or advisory services, and any shares of Common Stock or other equity securities of the Company acquired, or caused to be acquired, by PXP and its subsidiaries or such Related Investment Company in the conduct of their respective businesses in the ordinary course for the account of, or for the benefit of, clients of PXP or its subsidiaries, policyholders or investors (other than Phoenix or its Affiliates), and not with the purpose of avoiding the provisions of Section 3.1 below, shall not be deemed, for purposes of this Agreement, to be beneficially owned by Phoenix or its Affiliates. (c) "Beneficial ownership," "beneficial owner" and "beneficially own" shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement; provided that Phoenix and each of its Affiliates and any Person or Group shall be deemed to be the beneficial owners of any shares of Common Stock that Phoenix or such Affiliate, Person and/or Group, as the case may be, has the right to acquire within sixty (60) days after the determination date pursuant to any other agreement, arrangement or understanding or upon the exercise of conversion or exchange rights, warrants, options or otherwise. (d) "Board of Directors" shall mean the Board of Directors of the Company. (e) "Business Day" shall mean any day on which banking institutions in New York, New York are customarily open for the purpose of transacting business. -2- (f) "Common Stock" shall mean the Common Stock, without par value, of the Company. (g) "Common Stock Offering" shall mean the underwritten public offering of shares of Common Stock (including shares of Common Stock sold to satisfy any over-allotment option granted to the underwriters), which offering includes shares of Common Stock that Phoenix and/or its Affiliates beneficially own, and with respect to which shares Phoenix, Phoenix Life or Holdings has requested a piggy-back registration pursuant to Section 2.4 of the Registration Rights Agreement, which offering is described in the prospectus that is part of a Registration Statement on Form S-3, File No. 333-99869, that the Company has filed with the Securities and Exchange Commission. (h) "Continuing Directors" shall mean the members of the Board of Directors of the Company immediately prior to the date of the Original Standstill Agreement and any members of the Board of Directors subsequently nominated by the Board of Directors; provided, however, that neither Fiondella nor the Holdings Designee shall constitute a Continuing Director or be counted in determining the presence of a quorum of Continuing Directors. (i) "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. (j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (k) "Fiondella" shall mean Robert W. Fiondella, a director of the Company pursuant to the Original Standstill Agreement. (l) "Group" shall have the meaning comprehended by Section 13(d)(3) of the Exchange Act as in effect on the date of this Agreement. (m) "Holdings Designee" shall mean a member of the Board of Directors of the Company who was designated by Holdings for nomination pursuant to the Original Standstill Agreement, but shall not include Fiondella or Martin L. Vaughan, III. As of the date of this Agreement, the Holdings Designee is David W. Searfoss. (n) "Indenture" shall mean the Indenture, dated May 3, 1999, executed by the Company and Crestar Bank (now known as SunTrust Banks, Inc.), as Trustee, in connection with the issuance of the Subordinated Debentures. (o) "Person" shall have the meaning set forth in Section 3(a)(9) of the Exchange Act as in effect on the date of this Agreement, and shall include, without limitation, corporations, partnerships, limited liability companies and trusts. (p) "Phoenix Collateral Agreement" shall mean the Collateral Agreement, to be entered into at the closing of the Phoenix Purchase Contract Offering, among Phoenix, -3- as pledgor, Wachovia Bank, National Association, as collateral agent, and Wachovia Bank, National Association, as purchase contract agent. (q) "Phoenix Ownership Percentage" shall mean, at any time, the percentage of the Adjusted Outstanding Shares that is beneficially owned in the aggregate by Phoenix and its Affiliates. As of the date of this Agreement, the Phoenix Ownership Percentage is 14.1%. (r) "Phoenix Purchase Contract Agreement" shall mean the Purchase Contract Agreement, to be entered into at the closing of the Phoenix Purchase Contract Offering, between Phoenix and Wachovia Bank, National Association, as purchase contract agent. (s) "Phoenix Purchase Contract Offering" shall mean the underwritten public offering of the Phoenix Purchase Contracts, which offering is described in the prospectus that is part of a Registration Statement on Form S-3, File No. 333-99871, that Phoenix has filed with the Securities and Exchange Commission. (t) "Phoenix Purchase Contracts" shall mean the stock purchase contracts issued by Phoenix pursuant to the Phoenix Purchase Contract Agreement (including any stock purchase contracts sold to satisfy any over-allotment option granted to the underwriters in the Phoenix Purchase Contract Offering), which stock purchase contracts entitle the holder to receive shares of Common Stock on the settlement date, with respect to which shares Phoenix, Phoenix Life or Holdings has requested a demand registration pursuant to Section 2.3 of the Registration Rights Agreement. (u) "Phoenix Securities" shall mean collectively (i) the 1,730,084 shares of Common Stock that Holdings acquired pursuant to the terms of the Stock Purchase Agreement, (ii) the Subordinated Debentures acquired by Holdings and Phoenix Life pursuant to the terms of the Stock Purchase Agreement, (iii) the shares of Common Stock into which the Subordinated Debentures are convertible pursuant to the terms of the Subordinated Debentures, (iv) the 5,850 additional shares of Common Stock that Phoenix Life owns as of the date of this Agreement and (v) any other shares of Common Stock that Phoenix and its Affiliates may acquire from time to time, including without limitation such additional shares of Common Stock that the Company may issue with respect to such shares pursuant to any stock splits, stock dividends, recapitalizations, restructurings, reclassifications or similar transactions. (v) "PXP" shall mean Phoenix Investment Partners, Ltd., a Delaware corporation and a wholly-owned subsidiary of Phoenix. (w) "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated May 3, 1999, executed by the Company, Holdings and Phoenix Life in connection with the Stock Purchase Agreement. (x) "Securities Act" shall mean the Securities Act of 1933, as amended. (y) "Subordinated Debentures" shall mean the Company's 5.25% Convertible Subordinated Debentures (Due 2014), in the aggregate principal amount of $32,000,000, acquired by Holdings and Phoenix Life pursuant to the Stock Purchase Agreement. -4- (z) "Standstill Percentage" shall mean, at any time, 20.0% of the Adjusted Outstanding Shares. (aa) "Transfer" shall mean sell, transfer, assign, pledge, hypothecate, give away or in any manner dispose of any Common Stock or Subordinated Debentures. Section 1.2. Representations and Warranties of Phoenix. Phoenix represents and warrants to the Company as follows: (a) Phoenix is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) Except for the Phoenix Securities, neither Phoenix nor any of its Affiliates beneficially owns any Common Stock or any options, warrants or rights of any nature (including conversion and exchange rights) to acquire beneficial ownership of any Common Stock. (c) Phoenix has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by Phoenix have been duly authorized by all necessary corporate action on behalf of Phoenix. This Agreement is enforceable against Phoenix in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (d) The execution, delivery and performance of this Agreement by Phoenix does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of Phoenix, or any statute, law, regulation, order or decree applicable to Phoenix, or any contract, commitment, agreement, arrangement or restriction of any kind to which Phoenix is a party or by which Phoenix is bound, other than such violations as would not prevent or materially delay the performance by Phoenix of its obligations hereunder or otherwise subject the Company to any material claim or liability. Section 1.3. Representations and Warranties of Phoenix Life. Phoenix Life represents and warrants to the Company as follows: (a) Phoenix Life is a life insurance company duly organized, validly existing and in good standing under the laws of the State of New York. (b) Phoenix Life has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by Phoenix Life have been duly authorized by all necessary corporate action on behalf of Phoenix Life. This Agreement is enforceable against Phoenix Life in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). -5- (c) The execution, delivery and performance of this Agreement by Phoenix Life does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of Phoenix Life, or any statute, law, regulation, order or decree applicable to Phoenix Life, or any contract, commitment, agreement, arrangement or restriction of any kind to which Phoenix Life is a party or by which Phoenix Life is bound, other than such violations as would not prevent or materially delay the performance by Phoenix Life of its obligations hereunder or otherwise subject the Company to any material claim or liability. Section 1.4. Representations and Warranties of Holdings. Holdings represents and warrants to the Company as follows: (a) Holdings is a corporation duly organized, validly existing and in good standing under the laws of the State of Connecticut. (b) Holdings has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by Holdings have been duly authorized by all necessary corporate action on behalf of Holdings. This Agreement is enforceable against Holdings in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (c) The execution, delivery and performance of this Agreement by Holdings does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of Holdings, or any statute, law, regulation, order or decree applicable to Holdings, or any contract, commitment, agreement, arrangement or restriction of any kind to which Holdings is a party or by which Holdings is bound, other than such violations as would not prevent or materially delay the performance by Holdings of its obligations hereunder or otherwise subject the Company to any material claim or liability. Section 1.5. Representations and Warranties of the Company. The Company hereby represents and warrants to Phoenix, Phoenix Life and Holdings as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. (b) The Company has full legal right, power and authority to enter into and perform this Agreement, and the execution and delivery of this Agreement by the Company have been duly authorized by all necessary corporate action on behalf of the Company. This Agreement is enforceable against the Company in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or an action at law). (c) The execution, delivery and performance of this Agreement by the Company does not and will not conflict with or constitute a violation of or default under the Charter or Bylaws (or comparable documents) of the Company, or any statute, law, regulation, order or decree -6- applicable to the Company, or any contract, commitment, agreement, arrangement or restriction of any kind to which the Company is a party or by which the Company is bound, other than such violations as would not prevent or materially delay the performance by the Company of its obligations hereunder or otherwise subject Phoenix, Phoenix Life or Holdings to any material claim or liability. ARTICLE II Actions upon Effectiveness of Agreement --------------------------------------- Section 2.1. Effectiveness of Agreement. This Agreement shall become effective immediately upon the earlier of (i) the closing of the Common Stock Offering and (ii) the closing of the Phoenix Purchase Contract Offering (the "Effective Time"). At the Effective Time, this Agreement shall replace the Original Standstill Agreement in its entirety, and the Original Standstill Agreement shall be of no further force and effect. Section 2.2. Required Conversion of Subordinated Debentures. In connection with the Phoenix Transactions, Phoenix Life shall have caused the Subordinated Debentures to be converted, in their entire aggregate principal amount, into shares of Common Stock immediately prior to the Effective Time. Section 2.3. Required Resignation from the Board of Directors. (a) The Holdings Designee as of the date of this Agreement has delivered to the Company a letter, in the form attached to this Agreement as Exhibit A, that provides for his resignation from the Board of Directors effective as of December 31, 2002. To the extent that the Holdings Designee is not David W. Searfoss, but another individual that has been designated as such by Holdings as permitted by Section 2.4 of the Original Standstill Agreement, Holdings shall have caused the Holdings Designee to resign from the Board of Directors effective as of December 31, 2002. In the event that the Holdings Designee shall fail or refuse to resign from the Board of Directors by the time specified above, the Company may seek such resignation or, in the alternative, the Continuing Directors may seek the removal of the Holdings Designee. (b) Upon any shareholder vote relating to the removal of a director for failure or refusal to resign pursuant to this Section 2.3, Phoenix and its Affiliates shall (i) attend any meeting either in person or by proxy and (ii) vote in favor of such removal. At such time as a director becomes subject to resignation pursuant to this Section 2.3, the Board of Directors may amend its Bylaws or take such other action as it deems appropriate to reduce the number of directors constituting the Board of Directors proportionately or fill the vacancy caused by such resignation(s) with its own nominee in accordance with the applicable provisions of the Charter and Bylaws of the Company. Section 2.4. Continuing Board Representation. From and after the Effective Time, the Company shall not be required to nominate either Fiondella or the Holdings Designee as a director of the Company nor maintain a Board seat for either Fiondella or the Holdings Designee, except as otherwise set forth in Section 2.3(a) above. Fiondella shall be subject to the same nomination and election process as other directors generally from and after the Effective Time. -7- Section 2.5. Required Sales of Phoenix Securities. Phoenix, Phoenix Life and Holdings agree that they will sell, convey or otherwise transfer, or cause to be sold, conveyed or otherwise transferred, a number of Phoenix Securities so that, on the first day following the settlement date for the Phoenix Purchase Contracts, the number of Phoenix Securities shall not exceed 4,549,120 shares of Common Stock less (a) the number of shares of Common Stock to be sold by Phoenix in the Common Stock Offering and (b) the number of shares of Common Stock to be delivered to holders of the Phoenix Purchase Contracts, as required by the Phoenix Purchase Contract Agreement, on such settlement date. Section 2.6. No Voting Trust. This Agreement does not create or constitute, and shall not be construed as creating or constituting, a voting trust agreement under the Virginia Stock Corporation Act or any other applicable corporation law. ARTICLE III Standstill Restrictions; Voting Matters --------------------------------------- Section 3.1. Standstill Restrictions. (a) During the term of this Agreement, Phoenix, Phoenix Life and Holdings covenant and agree that Phoenix, Phoenix Life and Holdings shall not, and shall not permit any of their Affiliates to, either individually or as part of a Group, directly or indirectly: (i) acquire (other than acquisitions resulting from corporate action taken by the Board of Directors with respect to any pro rata distribution of shares of Common Stock in connection with any stock split, stock dividend, recapitalization, reclassification or similar transaction), propose to acquire (or publicly announce or otherwise disclose an intention to propose to acquire), offer to acquire, or agree to acquire any Common Stock (or any options, warrants, rights or other securities exercisable for, or convertible or exchangeable into, Common Stock) if the effect of such acquisition would cause the Phoenix Ownership Percentage to equal or exceed the Standstill Percentage (other than as a result of any stock purchases or repurchases by the Company); provided that this Section 3.1(a)(i) shall not apply to (a) any acquisition of Common Stock or of options, warrants, rights or other securities exercisable for, or convertible or exchangeable into, Common Stock granted to any Person pursuant to any benefit plan of the Company or any of its Affiliates or the exercise, conversion or exchange of any such option, warrant, right or other security, (b) any acquisition of Common Stock upon the exercise by Phoenix, Phoenix Life, Holdings or their Affiliates of rights pursuant to any Rights Agreement that may be adopted by the Company for the purpose of deterring coercive takeover activities with respect to the Company, provided that all of the shares of Common Stock so acquired upon the exercise of the rights shall be subject to all of the terms of this Agreement or (c) any acquisition of Common Stock upon the exercise by Phoenix, Phoenix Life, Holdings or their Affiliates of any options, warrants, rights or other securities exercisable for, or convertible or exchangeable into, Common Stock granted or issued to all holders of Common Stock. (ii) propose (or publicly announce or otherwise disclose an intention to propose), solicit, offer, seek or take any action to effect, negotiate with or provide any -8- confidential information relating to the Company or its business to any other Person with respect to, any tender or exchange offer, merger, consolidation, share exchange, business combination, restructuring, recapitalization or similar transaction involving the Company (other than (x) any of the foregoing that has been approved by the Board of Directors or (y) in connection with any tender or exchange offer in which the Board of Directors has (a) recommended that its shareholders accept such offer or (b) after ten (10) business days (as defined in Rule 14d-1 under the Exchange Act as in effect on the date of this Agreement) from the date of commencement of such offer, expressed no opinion, remained neutral, was unable to take a position or otherwise did not oppose or recommend that its shareholders reject such offer); (iii) make, or in any way participate in, any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), solicit any consent or communicate with or seek to advise or influence any person or entity with respect to the voting of any Common Stock or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the Company; provided that nothing in this Section 3.1(a)(iii) shall apply to any deemed solicitation of proxies by Fiondella that may result from his position or status as a director of the Company at the time of any general solicitation of proxies by the management of the Company; (iv) form, participate in or join any Person or Group with respect to any Common Stock, or otherwise act in concert with any Person for the purpose of (x) acquiring beneficial ownership of any Common Stock or (y) holding or disposing of Common Stock for any purpose prohibited by this Section 3.1(a); (v) except as specifically provided in Section 3.2 below and except as specifically required by the Collateral Agreement, deposit any Common Stock into a voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting thereof; (vi) initiate, propose or otherwise solicit shareholders for the approval of any shareholder proposal with respect to the Company as described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce any other Person to initiate, propose or otherwise solicit any such shareholder proposal; (vii) except as specifically provided in Article II of this Agreement, seek election to or seek to place a representative on the Board of Directors, or seek the removal of any member of the Board of Directors (other than the Holdings Designee); (viii) call or seek to have called any meeting of the shareholders of the Company for any purpose; (ix) take any other action to seek to Control the management or policies of the Company; (x) demand, request or propose to amend, waive or terminate the provisions of this Section 3.1(a); or -9- (xi) agree to do any of the foregoing, or advise, assist, encourage or persuade any third party to take any action with respect to any of the foregoing. (b) Phoenix, Phoenix Life and Holdings agree that they will notify the Company promptly if any inquiries or proposals are received by, any information is exchanged with respect to, or any negotiations or discussions are initiated or continued by or with, Phoenix, Phoenix Life, Holdings or any of their Affiliates regarding any matter described in Section 3.1(a) above. Phoenix and the Company shall mutually agree upon an appropriate response to be made to any such proposals received by Phoenix, Phoenix Life, Holdings or any of their Affiliates. (c) Nothing contained in this Article III shall be deemed to restrict the manner in which Fiondella may participate in deliberations or discussions of the Board of Directors or individual consultations with any member of the Board of Directors, so long as such actions do not otherwise violate any provision of Section 3.1(a) above. (d) Each of Phoenix, Phoenix Life and Holdings covenants and agrees that, during the term of this Agreement and so long as Phoenix, Phoenix Life, Holdings or their Affiliates Control (i) PXP and its subsidiaries (or any successor of PXP and its subsidiaries) or (ii) any Person registered as an investment company under the Investment Company Act of 1940, as amended, which might otherwise be deemed to be an "affiliate" of Phoenix, Phoenix Life or Holdings within the meaning of Rule 12b-2 under the Exchange Act (a "Related Investment Company"), it will not, and will not permit any of its Affiliates to, cause or permit PXP and its subsidiaries (or any such successor of PXP and its subsidiaries) or such Related Investment Company, directly or indirectly, to (i) attempt to exercise Control or influence over the business and affairs of the Company, (ii) act in concert with Phoenix, Phoenix Life, Holdings or their Affiliates to violate the provisions of this Agreement or (iii) act in concert with any other Person for the purposes of violating the provisions of this Agreement or otherwise effecting a change of Control of the Company. Each of Phoenix, Phoenix Life and Holdings also covenants and agrees that, during the term of this Agreement, it will not direct or influence, or attempt to direct or influence, the voting or disposition of shares of Common Stock owned of record or beneficially by PXP and its subsidiaries (or any successor of PXP and its subsidiaries). Section 3.2. Voting Matters. (a) During the term of this Agreement, Phoenix, Phoenix Life and Holdings will take all such action as may be required so that the Common Stock beneficially owned and entitled to be voted by Phoenix, Phoenix Life, Holdings and their Affiliates, as a Group, are voted or caused to be voted (in person or by proxy): (i) with respect to nominees to the Board of Directors, in accordance with the recommendation of the Board of Directors, or a nominating or similar committee of the Board of Directors, if any such committee exists and makes a recommendation; and (ii) in accordance with the recommendation of the Board of Directors with respect to any transaction to be effected with the Company or its Affiliates in connection with an unsolicited tender or exchange offer, any "election contest" (as such term is defined or used in Rule 14a-11 under the Exchange Act as in effect on the date of this Agreement) with respect to -10- the Board of Directors of the Company or any other attempt to acquire Control of the Company or the Board of Directors. (b) Until May 3, 2004, Phoenix, Phoenix Life and Holdings will take all such action as may be required so that the Common Stock beneficially owned and entitled to be voted by Phoenix, Phoenix Life, Holdings and their Affiliates, as a Group, are voted or caused to be voted (in person or by proxy) in accordance with the recommendation of the Board of Directors of the Company with respect to negotiated mergers, acquisitions, divestitures, consolidations, sale of assets, share exchanges or other similar transactions for which shareholder approval is sought. (c) With respect to all matters brought before the Company's shareholders for a vote not otherwise provided for in Section 2.3(b) or Section 3.2(a) and (b) above, Phoenix, Phoenix Life, Holdings and their Affiliates may vote in accordance with their independent judgment without regard to any request or recommendation of the Board of Directors. (d) Phoenix, Phoenix Life, Holdings and their Affiliates who beneficially own and are entitled to vote any of the Common Stock shall be present, in person or by proxy, at all duly held meetings of shareholders of the Company so that the Common Stock held by Phoenix, Phoenix Life, Holdings and their Affiliates may be counted for the purposes of determining the presence of a quorum at such meetings. ARTICLE IV Transfers of Phoenix Securities ------------------------------- Section 4.1. Transfer Restrictions. During the term of this Agreement, Phoenix, Phoenix Life, Holdings and their Affiliates, shall not, directly or indirectly, Transfer any of the Phoenix Securities beneficially owned by Phoenix, Phoenix Life, Holdings and their Affiliates to any Person or Group without the prior written consent of the Company (which consent may be withheld in the Company's sole discretion), if (i) as a result of such Transfer, such Person or Group would have beneficial ownership of Common Stock representing in the aggregate more than 9.9% of the issued and outstanding shares of Common Stock, such determination to be based upon (x) the most recent publicly available information as to the number of shares of Common Stock beneficially owned by such Person or Group (to the extent such information is available) or the transferor's actual knowledge, after due inquiry, as to such beneficial ownership, (y) the number or amount of Phoenix Securities proposed to be Transferred and (z) the number of issued and outstanding shares of Common Stock on the date of Transfer (as adjusted pursuant to Rule 13d-3(d)(1)(i) under the Exchange Act), or (ii) prior to such Transfer, such Person or Group has beneficial ownership of Common Stock representing in the aggregate more than 9.9% of the issued and outstanding shares of Common Stock, such determination to be based upon (x) the most recent publicly available information as to the number of shares of Common Stock beneficially owned by such Person or Group (to the extent such information is available) or the transferor's actual knowledge, after due inquiry, as to such beneficial ownership and (y) the number of issued and outstanding shares of Common Stock on the date of Transfer (as adjusted pursuant to Rule 13d-3(d)(1)(i) under the Exchange Act). Subject to the foregoing limitation (except (1) for Transfers pursuant to the Registration Statement on Form S-3, File No. 333-99869, in connection with the Common Stock Offering and the Registration Statements on -11- Form S-3, File Nos. 333-99871 and 333-99873, in connection with the Phoenix Purchase Contract Offering under subparagraph (b) of this Section 4.1, to which the foregoing transfer restrictions will not apply, and (2) for Transfers under subparagraphs (g), (h) and (i) of this Section 4.1, to which the foregoing transfer restrictions will not apply), Phoenix, Phoenix Life, Holdings and their Affiliates may Transfer the Phoenix Securities beneficially owned by Phoenix, Phoenix Life, Holdings and their Affiliates in the following manner: (a) to the Company or any Affiliate of the Company; (b) pursuant to an effective registration statement under the Securities Act as provided in the Registration Rights Agreement; provided that such registration statement shall apply only to sales of the Common Stock of the Company; (c) pursuant to Rule 144, Rule 144A, Regulation S or any other applicable exemption from registration under the Securities Act; (d) pursuant to a distribution (including any such distribution pursuant to any liquidation or dissolution) by Phoenix, Phoenix Life or Holdings to its shareholders; provided that, upon a change in Control of Phoenix, Phoenix Life or Holdings occurring after the date of this Agreement, Phoenix, Phoenix Life or Holdings shall not distribute any of the Phoenix Securities to its Affiliates pursuant to this Section 4.1(d) or otherwise unless Phoenix, Phoenix Life or Holdings has received the prior written consent of the Company (which consent may be withheld in the Company's sole discretion) and obtained an agreement in writing by the distributee to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto; (e) pursuant to a merger or consolidation of the Company or pursuant to a plan of liquidation of the Company, which has been approved by the affirmative vote of a majority of the members of the Board of Directors then in office; (f) pursuant to a tender or exchange offer in which more than 67% of the issued and outstanding shares of Common Stock have been tendered by Persons who are not Affiliates of Phoenix, Phoenix Life, Holdings or their Affiliates or in which the Board of Directors has (i) recommended that its shareholders accept such offer or (ii) after ten (10) business days (as defined in Rule 14d-1 under the Exchange Act as in effect on the date of this Agreement) from the date of commencement of such offer, expressed no opinion, remained neutral, was unable to take a position or otherwise did not oppose or recommend that its shareholders reject such offer; (g) to any Affiliate of Phoenix, Phoenix Life or Holdings; provided that such Affiliate has delivered to the Company an agreement in writing by such Affiliate to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto; (h) pursuant to a merger or consolidation of Phoenix, Phoenix Life or Holdings or any Affiliate to which the Phoenix Securities have theretofore been Transferred; provided that the Person surviving such merger or formed by such consolidation shall have delivered to the -12- Company an agreement in writing by such Person to be bound by the terms and conditions of this Agreement, such agreement to be substantially in the form of Exhibit B attached hereto; or (i) as required by the Phoenix Collateral Agreement and Section 3.15 or 3.16 of the Phoenix Purchase Contract Agreement. In connection with any permitted Transfer pursuant to this Section 4.1, the rights of Phoenix, Phoenix Life and Holdings under this Agreement shall not transfer to any transferee(s) of the Phoenix Securities, except upon express assignment of such rights to the extent permitted by Section 7.3 hereof. Section 4.2 Lock-Up Arrangement. In addition to the restrictions set forth in Section 4.1 above, during (i) the period of nine months from the date of the Prospectus that relates to the Common Stock Offering and (ii) the period of nine months from the date of the Prospectus that relates to the Phoenix Purchase Contract Offering, Phoenix, Phoenix Life and Holdings will not, without the prior written consent of the Company, (x) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any share of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement under the Securities Act with respect to any of the foregoing or (y) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of shares of Common Stock, whether any such swap or transaction described in clause (x) or (y) above is to be settled by delivery of shares of Common Stock or such other securities, in cash or otherwise; provided that this Section 4.2 shall not apply to (a) the Phoenix Purchase Contracts to be sold in the Phoenix Purchase Contract Offering, (b) the shares of Common Stock to be pledged and delivered under such Phoenix Purchase Contracts, (c) the shares of Common Stock to be sold by Phoenix as the selling shareholder in the Common Stock Offering, (d) transactions by certain of Phoenix's subsidiaries that are engaged in the business of acting as a broker-dealer or an investment advisor in the ordinary course of their business or (e) sales of shares of Common Stock by Phoenix to any wholly-owned subsidiary of Phoenix or from any wholly-owned subsidiary of Phoenix to another wholly-owned subsidiary of Phoenix or from any wholly-owned subsidiary of Phoenix to Phoenix. Section 4.3. Transfers to Affiliates. In the event of any Transfer of the Phoenix Securities to an Affiliate of Phoenix, Phoenix Life or Holdings under Section 4.1 above, or such Affiliate otherwise becomes the beneficial owner of any of the Phoenix Securities, Phoenix, Phoenix Life and Holdings shall use its best efforts to cause such Affiliate to comply with all of the provisions of this Agreement, including without limitation this Article IV. Section 4.4. Confidential Information. In connection with any permitted Transfer of the Phoenix Securities pursuant to this Article IV, neither Phoenix, Phoenix Life, Holdings nor their Affiliates shall disclose any confidential information relating to the Company or its business to any Person except as required by applicable law, including without limitation Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, but only to the extent that any required disclosure of such confidential information has been preceded by the execution of a confidentiality agreement by Phoenix, Phoenix Life, Holdings or their Affiliates, as the case may -13- be, and such Person substantially in the form attached hereto as Exhibit C. Such confidentiality agreement shall be promptly forwarded to the Company for its execution, which execution by the Company may be subsequent to the permitted Transfer or disclosure to such Person; provided that the failure of the Company to so execute such confidentiality agreement shall in no way be construed to be a failure on the part of Phoenix, Phoenix Life, Holdings or their Affiliates, as the case may be, to fulfill its obligations under this paragraph or to limit or affect the validity of such confidentiality agreement as between Phoenix, Phoenix Life, Holdings or their Affiliates, as the case may be, and such Person. ARTICLE V Further Assurances ------------------ Each party shall execute and deliver such additional instruments and other documents and shall take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of its respective obligations under this Agreement. Phoenix shall deliver to the Company, concurrently with the filing thereof with the Securities and Exchange Commission, copies of all Forms 3, 4 and 5, Form 144 and Schedules 13D or 13G, and each amendment thereto, filed by Phoenix, Phoenix Life, Holdings or their Affiliates with respect to the Phoenix Securities pursuant to the Exchange Act. Phoenix, Phoenix Life and Holdings agree to provide any additional information requested by the Company regarding Transfers of the Phoenix Securities for the purpose of determining compliance with this Agreement. Phoenix shall notify the Company promptly of any proposed Transfer of the Phoenix Securities pursuant to Sections 4.1(g) and (h) hereof. If reasonably requested by the Company at any time during the term of this Agreement, Phoenix agrees to confirm in writing to the Company the number of Phoenix Securities held, beneficially and of record, by Phoenix and its Affiliates as of the latest practicable date. ARTICLE VI Termination ----------- Unless earlier terminated by written agreement of the parties hereto, this Agreement shall terminate on May 3, 2009. Any termination of this Agreement as provided herein shall be without prejudice to the rights of any party arising out of the breach by any other party of any provisions of this Agreement that occurred prior to the termination. ARTICLE VII Miscellaneous ------------- Section 7.1. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing (including telecopy or similar teletransmission), addressed as follows: -14- If to the Company, Hilb, Rogal and Hamilton Company to it at: 4951 Lake Brook Drive, Suite 500 Glen Allen, Virginia 23060 Telecopier: (804) 747-3138 Attention: Andrew L. Rogal With a copy to: Williams Mullen Clark & Dobbins 1021 East Cary Street, 16th Floor Richmond, Virginia 23219 Telecopier: (804) 783-6507 Attention: Robert E. Spicer, Jr., Esquire If to Phoenix, The Phoenix Companies, Inc. Phoenix Life or One American Row Holdings, to them at: Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: Nancy J. Engberg, Esquire Phoenix Life Insurance Company One American Row Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: Nancy J. Engberg, Esquire PM Holdings, Inc. One American Row Hartford, Connecticut 06115 Telecopier: (860) 403-5182 Attention: Nancy J. Engberg, Esquire With a copy to: Debevoise & Plimpton 919 Third Avenue New York, New York 10022 Telecopier: (212) 909-6836 Attention: Alan H. Paley, Esquire Unless otherwise specified herein, such notices or other communications shall be deemed received (a) in the case of any notice or communication sent other than by mail, on the date actually delivered to such address (evidenced, in the case of delivery by overnight courier, by confirmation of delivery from the overnight courier service making such delivery, and in the case of a telecopy, by receipt of a transmission confirmation form or the addressee's confirmation of receipt), or (b) in the case of any notice or communication sent by mail, three (3) Business Days after being sent, if sent by registered or certified mail, with first-class postage prepaid. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto. -15- Section 7.2. Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated except by an instrument in writing signed by Phoenix, Phoenix Life, Holdings and the Company following approval thereof by a majority of the Continuing Directors. Section 7.3. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties and their respective successors and assigns, including without limitation in the case of any corporate party hereto any corporate successor by merger or otherwise; provided that no party may assign this Agreement without the other party's prior written consent, which consent will not be required in the event of the Transfer of the Phoenix Securities in accordance with Sections 4.1(g) or 4.1(h) hereof. Notwithstanding the foregoing, during the term of this Agreement, as long as Phoenix, Phoenix Life, Holdings or any of their Affiliates beneficially own any of the Phoenix Securities, no assignment of this Agreement by Phoenix, Phoenix Life, Holdings or any of their Affiliates shall relieve the assignor from its obligation to fully perform or comply with the terms of this Agreement and, unless otherwise expressly agreed in writing by the Company, such assignor shall remain bound by all of the provisions hereof. Section 7.4. Entire Agreement. This Agreement, the Stock Purchase Agreement, the Indenture and the Registration Rights Agreement embody the entire agreement and understanding among the parties relating to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. There are no covenants by the parties hereto relating to such subject matter other than those expressly set forth in this Agreement, the Stock Purchase Agreement, the Indenture and the Registration Rights Agreement. Section 7.5. Specific Performance. The parties acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. Section 7.6. Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. Section 7.7. No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. -16- Section 7.8. No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of and shall not be enforceable by any Person who or which is not a party hereto. Section 7.9. Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, hereby (i) irrevocably submits, and agrees to cause each of its Affiliates to submit, to the jurisdiction of the federal courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and in the event that such federal courts shall not have subject matter jurisdiction over the relevant proceeding, then of the state courts located either in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, for the purpose of any Action arising out of or based upon this Agreement or relating to the subject matter hereof or the transactions contemplated hereby, (ii) waives, and agrees to cause each of its Affiliates to waive, to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its Affiliates to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees not to commence or to permit any of its Affiliates to commence any Action arising out of or based upon this Agreement or relating to the subject matter hereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such Action to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party hereby consents to service of process in any such proceeding in any manner permitted by Virginia or Connecticut law, as the case may be, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 7.1 above is reasonably calculated to give actual notice. Notwithstanding anything contained in this Section 7.9 to the contrary with respect to the parties' forum selection, if an Action is filed against a party to this Agreement, including its Affiliates, by a Person who or which is not a party to this Agreement, an Affiliate of a party to this Agreement, or an assignee thereof (a "Third Party Action"), in a forum other than the federal district court or a state court located in the City of Richmond, Virginia, or in the City of Hartford, Connecticut, and such Third Party Action is based upon, arises from, or implicates rights, obligations or liabilities existing under this Agreement or acts or omissions pursuant to this Agreement, then the party to this Agreement, including its Affiliates, joined as a defendant in such Third Party Action shall have the right to file cross-claims or third-party claims in the Third Party Action against the other party to this Agreement, including its Affiliates, and even if not a defendant therein, to intervene in such Third Party Action with or without also filing cross-claims or third-party claims against the other party to this Agreement, including its Affiliates. Section 7.10. Governing Law. This Agreement shall be governed by and construed in accordance with the domestic substantive law of the Commonwealth of Virginia, without giving effect to any choice or conflict of law provision or rule that would cause the application of the law of any other jurisdiction. Section 7.11. Name, Captions. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not affect the interpretation or construction hereof. -17- Section 7.12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by fewer than all, but together signed by all, the parties hereto. Section 7.13. Expenses. Each of the parties hereto shall bear their own expenses incurred in connection with this Agreement and the transactions contemplated hereby, except that in the event of a dispute concerning the terms or enforcement of this Agreement, the prevailing party in any such dispute shall be entitled to reimbursement of reasonable legal fees and disbursements reasonably incurred from the other party or parties to such dispute. Section 7.14. Severability. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall (to the extent permitted under applicable law) be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof. [SIGNATURES ON NEXT PAGE] -18- IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Amended and Restated Voting and Standstill Agreement to be executed, as of the date first above written by their respective officers thereunto duly authorized. HILB, ROGAL AND HAMILTON COMPANY By: /s/ A. Brent King -------------------------------------------- Name: A. Brent King Title: Vice President, Associate General Counsel and Assistant Secretary THE PHOENIX COMPANIES, INC. By: /s/ Naomi Kleinman -------------------------------------------- Name: Naomi Kleinman Title: Vice President-Corporate Finance PHOENIX LIFE INSURANCE COMPANY By: /s/ Naomi Kleinman -------------------------------------------- Name: Naomi Kleinman Title: Vice President-Corporate Finance PM HOLDINGS, INC. By: /s/ Naomi Kleinman -------------------------------------------- Name: Naomi Kleinman Title: Vice President-Corporate Finance -19- Exhibit A Form of Resignation Agreement Hilb, Rogal and Hamilton Company 4951 Lake Brook Drive, Suite 500 Glen Allen, Virginia 23060 Ladies and Gentlemen: As required by Section 2.3(a) of the Amended and Restated Voting and Standstill Agreement (the "Agreement"), dated November 7, 2002, between Hilb, Rogal and Hamilton Company ("the Company"), The Phoenix Companies, Inc., a Delaware corporation, Phoenix Life Insurance Company, a New York life insurance company, and PM Holdings, Inc., a Connecticut corporation, I hereby resign from the Board of Directors of the Company effective as of December 31, 2002. Date: November 13, 2002 ------------------------------ David W. Searfoss Agreed to and Accepted: Hilb, Rogal and Hamilton Company By:___________________________ Name: Title: Exhibit B Form of Assumption Agreement Hilb, Rogal and Hamilton Company 4235 Innslake Drive Glen Allen, Virginia 23060 Ladies and Gentlemen: Pursuant to Section 4.1[(d), (g) or (h)] of the Amended and Restated Voting and Standstill Agreement (the "Agreement"), dated November 7, 2002, between Hilb, Rogal and Hamilton Company ("the Company"), The Phoenix Companies, Inc., a Delaware corporation ("Phoenix"), Phoenix Life Insurance Company, a New York life insurance company ("Phoenix Life"), and PM Holdings, Inc., a Connecticut corporation ("Holdings"), the undersigned hereby agrees to be bound by all of the terms and conditions of the Agreement to the same extent as if it were a party thereto and assumes all of the obligations of [Phoenix, Phoenix Life, Holdings or their Affiliate] under the Agreement with respect to the Phoenix Securities (as defined in the Agreement). [PHOENIX, PHOENIX LIFE, HOLDINGS or AFFILIATE] Date: _________________ By: -------------------------------------------- Name: Title: [TRANSFEREE] Date: _________________ By: -------------------------------------------- Name: Title: Agreed to and Accepted: Hilb, Rogal and Hamilton Company By:___________________________ Name: Title: Exhibit C Form of Confidentiality Agreement ________ __, 20__ CONFIDENTIAL - ------------ [Name] [Address] Re: Confidentiality Agreement ------------------------- Ladies and Gentlemen: In connection with our [soliciting, offering, seeking to effect or negotiating] with you with respect to the [sale, transfer, assignment, pledge, etc.] of [shares of Common Stock, without par value], of Hilb, Rogal and Hamilton Company (the "Company"), we are prepared to make available to you certain confidential information relating to the Company and its business (the "Confidential Information"). As a condition to your being furnished the Confidential Information, you agree to comply with the terms and conditions of this letter agreement (this "Agreement"). For the purposes of this Agreement, the term "Representatives" shall mean your employees, agents and advisors and the directors, officers, employees and agents of any of your advisors. The term "Third Party" shall be broadly interpreted to include without limitation any corporation, company, group, partnership, other entity or individual. The term "Confidential Information" shall not include information that (i) was or becomes generally available to the public other than as a result of a disclosure by you or your Representatives, or (ii) was or becomes available to you on a non-confidential basis from a source other than the Company or its advisors. You hereby agree to treat the Confidential Information as confidential and, unless required by applicable law, you shall not, and shall direct your Representatives not to, use in any way or to disclose, directly or indirectly, the Confidential Information to any Third Party without the written consent of the Company. It is understood and agreed that money damages would not be a sufficient remedy for any breach of this Agreement by you and that the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and you further agree to waive any requirement for the securing or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for your breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the Company. If you are in agreement with the foregoing, please so indicate by signing and returning one copy of this Agreement, whereupon it will constitute our agreement with respect to the subject matter hereof. Very truly yours, [Name] Officer of [Phoenix or Affiliate] CONFIRMED AND AGREED as of the date first written above: [NAME] By:_________________________________ Name: Title: Hilb, Rogal and Hamilton Company By:_________________________________ Name: Title: -2- EX-99 4 exhibit99-1.txt EXHIBIT 99.1 Exhibit 99.1 STATEMENT OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Form 10-Q of Hilb, Rogal and Hamilton Company for the quarter ended September 30, 2002, I, Andrew L. Rogal, Chief Executive Officer of Hilb, Rogal and Hamilton Company, hereby certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (a) such Form 10-Q for the quarter ended September 30, 2002 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and (b) the information contained in such Form 10-Q for the quarter ended September 30, 2002 fairly presents, in all material respects, the consolidated financial condition and results of operations of Hilb, Rogal and Hamilton Company and its subsidiaries as of and for the periods presented in such Form 10-Q. By: /s/Andrew L. Rogal Date: November 13, 2002 ----------------------------------- ------------------- Andrew L. Rogal Chief Executive Officer EX-99 5 exhibit99-2.txt EXHIBIT 99.2 Exhibit 99.2 STATEMENT OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Form 10-Q of Hilb, Rogal and Hamilton Company for the quarter ended September 30, 2002, I, Carolyn Jones, Senior Vice President, Chief Financial Officer and Treasurer of Hilb, Rogal and Hamilton Company, hereby certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (a) such Form 10-Q for the quarter ended September 30, 2002 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and (b) the information contained in such Form 10-Q for the quarter ended September 30, 2002 fairly presents, in all material respects, the consolidated financial condition and results of operations of Hilb, Rogal and Hamilton Company and its subsidiaries as of and for the periods presented in such Form 10-Q. By: /s/Carolyn Jones Date: November 13, 2002 ---------------------------------- ------------------ Carolyn Jones Senior Vice President, Chief Financial Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----