EXHIBIT 1.1
21,700,000 SHARES
XXXXXXX & XXXX FINANCIAL, INC.
SHARES OF CLASS A COMMON STOCK, $.01 PAR VALUE PER SHARE
UNDERWRITING AGREEMENT
March [ ], 1998
March [ ], 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxxxx Xxxxx International
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Xxxxxxx & Xxxx Financial, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters (as defined below)
21,700,000 shares of its Class A Common Stock, $.01 par value per share (the
"FIRM SHARES").
It is understood that, subject to the conditions hereinafter stated,
17,360,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 4,340,000 Firm Shares (the "INTERNATIONAL SHARES") will be sold to the
several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxxx,
Sachs & Co. and Xxxxxxx Xxxxx & Co. shall act as representatives (the "U.S.
REPRESENTATIVES") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited, Xxxxxxx Sachs International and Xxxxxxx Xxxxx
International shall
act as representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the UNDERWRITERS.
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 2,170,000 shares of its Class A
Common Stock, $.01 par value (the "ADDITIONAL SHARES") if and to the extent that
the U.S. Representatives shall have determined to exercise, on behalf of the
U.S. Underwriters, the right to purchase such shares of Class A Common Stock
granted to the U.S. Underwriters in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "SHARES". The
shares of Class A Common Stock, $.01 par value of the Company to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "CLASS A COMMON STOCK".
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian Persons, and the international prospectus, to be used in connection
with the offering and sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus (as described in Rule 434(a)(1) under the Securities
Act) in the respective forms first used to confirm sales of Shares are
hereinafter collectively referred to as the "PROSPECTUS"; If the Company has
filed an abbreviated registration statement to register additional shares of
Class A Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
As part of the offering contemplated by this Agreement (the "OFFERING"),
Xxxxxx Xxxxxxx & Co. Incorporated and certain of its affiliates (collectively,
"XXXXXX XXXXXXX") has agreed to reserve out of the Shares set forth opposite its
name on Schedule II to this Agreement, up to 1,250,000 shares, for sale to the
Company's employees, officers and directors and other parties associated with
the Company (collectively, "PARTICIPANTS"), as set forth in the Prospectus under
the heading "Underwriters" (the "DIRECTED SHARE PROGRAM"). The Shares to be
sold by Xxxxxx Xxxxxxx pursuant to the Directed Share Program (the "DIRECTED
SHARES") will be sold by Xxxxxx Xxxxxxx pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the business day on which this
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Agreement is executed will be offered to the public by Xxxxxx Xxxxxxx as set
forth in the Prospectus.
1. Representations and Warranties. Each of Torchmark Corporation,
a Delaware corporation ("TORCHMARK") and the Company represents and warrants to
and agrees with each of the Underwriters that:
(a) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) the Company
and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (2) the Company has
not purchased any of its outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on its
capital stock other than ordinary and customary dividends; and (3) there
has not been any material change in the capital stock, short-term debt
or long-term debt of the Company and its subsidiaries, except in each
case as described in the Prospectus.
(b) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its
subsidiaries, in each case except as described in the Prospectus.
(c) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
currently employed by them in connection with, and material to, the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse affect on the Company
and its subsidiaries, taken as a whole.
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(d) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in the Prospectus,
or, to the knowledge of the Company, is imminent; and the Company is not
aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors that could have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(e) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any of its subsidiaries has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described
in the Prospectus.
(f) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal or state
regulatory authorities necessary to conduct their respective businesses
(except for such failures to possess as would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole),
and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described the Prospectus.
(g) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's
general or specific authorizations; (2) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance
with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(h) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.
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(i) (A) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (C) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating
to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(j) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(k) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(l) This Agreement has been duly authorized, executed and
delivered by each of the Company and Torchmark.
(m) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
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(n) The shares of Class A Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly issued,
fully paid and non-assessable.
(o) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(p) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(q) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(r) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries
is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described or filed
as required.
(s) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
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(t) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT").
(u) Each of Xxxxxxx & Xxxx, Inc. ("WRI") and Xxxxxxx & Xxxx
Investment Management Company ("WRIMCO") is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended
(the "ADVISERS ACT") and neither WRI or WRIMCO is prohibited by any
provision of the Advisers Act or the Investment Company Act, or the
respective rules and regulations thereunder, from acting as an investment
adviser. WRI and WRIMCO are the only direct or indirect subsidiaries of
the Company required to be registered as investment advisers under the
Advisers Act.
(v) WRI is duly registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and under the
securities laws of each state where the conduct of its business requires
such registration and is in compliance in all material respects with all
United States federal and state laws requiring such registration or is
subject to no material liability or disability by reason of the failure
to be so registered in any such jurisdiction or to be in such compliance
in all material respects. WRI is a member in good standing of the
National Association of Securities Dealers (the "NASD"). None of the
Company's other direct or indirect subsidiaries is required to be
registered, licensed or qualified as a broker-dealer under the laws
requiring any such registration, licensing or qualification in any state
in which it conducts business or is subject to any material liability or
disability by reason of the failure to be so registered, licensed or
qualified.
(w) Xxxxxxx & Xxxx Services Company, Inc. ("WRSCO") is duly
registered as a transfer agent under the Exchange Act and under the
securities laws of each state where the conduct of its business requires
such registration and is in compliance in all material respects with all
United States federal and state laws requiring such registration or is
subject to no material liability or disability by reason of the failure
to be so registered in any such jurisdiction or to be in such compliance.
None of the Company's other direct or indirect subsidiaries is required
to be registered, licensed or qualified as a transfer agent under the
laws requiring any such registration, licensing or qualification in any
state in which it conducts business or is subject to any material
liability or disability by reason of the failure to be so registered,
licensed or qualified.
(x) None of the Company or its direct or indirect subsidiaries
including WRI and WRIMCO is required to be registered, licensed or
qualified as an investment adviser under the laws requiring any such
registration, licensing
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or qualification in any state in which it or its subsidiaries conduct
business or is not subject to material liability or disability by reason
of the failure to be so registered, licensed or qualified.
(y) Each of the Company, WRI and WRIMCO is and has been in
compliance with, and each such entity has or will have had, as the case
may be, received no notice of any violation of, (A) all laws,
regulations, ordinances and rules (including those of any non-
governmental self-regulatory agencies) applicable to it or its operations
relating to investment advisory or broker-dealer activities and (B) all
other such laws, regulations, ordinances and rules applicable to it and
its operations, except, in either case, where any failure by the Company,
WRI or WRIMCO to comply with any such law, regulation, ordinance or rule
would not have, individually or in the aggregate, a material adverse
effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole.
(z) Each entity for which WRI or WRIMCO acts as investment adviser
and which is required to be registered with the Commission as an
investment company under the Investment Company Act and which is listed
in the Prospectus under "Business -- Fund Summary" (a "FUND") is, and
upon consummation of the transactions contemplated herein will be, duly
registered with the Commission as an investment company under the
Investment Company Act and to the best knowledge of the Company, each
Fund has been operated in compliance in all material respects with the
Investment Company Act and the rules and regulations thereunder and to
the best knowledge of the Company, there are no facts with respect to any
such Fund that are likely to have a material adverse effect on the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole.
(aa) To the best knowledge of the Company, each Fund's
registration statement complies in all material respects with the
provisions of the Securities Act, the Investment Company Act and the
rules and regulations thereunder and does not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(bb) To the best knowledge of the Company, each agreement between
the Company, WRI, WRIMCO or any other subsidiary of the Company on the
one hand and any Fund or private client on the other hand is a legal and
valid obligation of the parties thereto, and none of the Company, WRI,
WRIMCO or any other subsidiary of the Company is in breach or violation
of or in default under any such agreement which would individually or in
the aggregate have a material adverse effect on, or cause a prospective
material adverse change in, the
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general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole.
(cc) The Offering will not, and the special dividend to the
shareholders of Torchmark of all of the Class A Common Stock and Class B
Common Stock owned by Torchmark after the Offering should not, constitute
an "assignment" as defined in the Investment Company Act and the Advisers
Act of any of the investment advisory contracts to which WRI or WRIMCO is
a party.
(dd) The Company and its subsidiaries (i) are in compliance with
any and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly
or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(ee) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(ff) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement except as disclosed in the Prospectus.
(gg) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(hh) The Company does not anticipate incurring significant
operating expenses or costs to ensure that all Company management
information systems will be year 2000 compliant.
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(ii) The Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with
the specific intent to unlawfully influence (i) a customer or supplier of
the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to
write or publish favorable information about the Company or its products.
(jj) The Company represents and warrants that any loans made to
officers or employees of the Company enabling such officers or employees
to participate in the Directed Share Program will not violate Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its names at U.S.$[ ] a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company agrees to
sell to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters
shall have a one-time right to purchase, severally and not jointly, up to
2,170,000 Additional Shares at the Purchase Price. If the U.S. Representatives,
on behalf of the U.S. Underwriters, elects to exercise such option, the U.S.
Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule I
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares.
Each of Torchmark (for itself and on behalf of its subsidiaries)
and the Company and each of the directors and executive officers of the Company
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx & Co.
Incorporated on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus (the "LOCK-UP PERIOD"), (i)
offer, pledge, sell, contract to sell, sell any option
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or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Class A Common Stock or any securities
convertible into or exercisable or exchangeable for Class A Common Stock or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Class A Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Class A Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Shares to be
sold hereunder, (B) the issuance by the Company of shares of Class A Common
Stock upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing, (C) transactions by any person other than the Company or Torchmark
relating to shares of Class A Common Stock or other securities acquired in open
market transactions after completion of the Offering, (D) options on shares of
Class A Common Stock issued in connection with employee benefit plans as
described in the Prospectus or (E) the issuance of Class A Common Stock as
payment for acquisitions by the Company, if all persons or entities receiving
shares of Class A Common Stock pursuant to this clause (E) agree to be subject
to the restrictions in clauses (i) and (ii) above for the remainder of the Lock-
up Period.
3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
U.S.$[ ] a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected
by you at a price that represents a concession not in excess of U.S.$[ ] a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of U.S.$[ ] a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on [ ], 1998, or at such
other time on the same or such other date, not later than [ ], 1998, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than [ ], 1998,
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as shall be designated in writing by the U.S. Representatives. The time and date
of such payment are hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations
of the Company to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than [ ] (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or
any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and a certificate, dated the Closing Date and signed by an
executive officer of Torchmark, to the effect that the representations
and warranties of the Company and Torchmark respectively contained in
this Agreement are true and correct as of the Closing Date and that each
of the Company and Torchmark has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
12
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx & Xxxx, L.L.P., special counsel for the Company, dated
the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(ii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus;
(iii) the shares of Class A Common Stock outstanding prior to
the issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;
(iv) the Shares have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance
of such Shares will not be subject to any preemptive or similar
rights;
(v) this Agreement has been duly authorized, executed and
delivered by each of the Company and Torchmark;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or, to the
best of such counsel's knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency
is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares by the U.S. Underwriters;
13
(vii) the statements (A) in the Prospectus under the captions
"Description of Capital Stock" and "Underwriters" and (B) in the
Registration Statement in Items 14 and 15, in each case insofar as
such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(viii) after inquiry of the executive officers and the general
counsel of the Company, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(ix) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act;
(x) Based on and assuming the accuracy of the determinations
of the Company's board of directors that the Company had adequate
surplus within the meaning of Section 170 of the Delaware General
Corporation law, the declaration of dividends to the shareholders of
the Company of (A) all of the capital stock of Xxxxxxx & Xxxx Asset
Management Company ("WRAMCO"), (B) the Company's $480 million
principal amount unsecured promissory notes due November 25, 2002
and (C) all of the capital stock of United Investors Life Insurance
Company ("UILIC"), did not violate Section 170 of the Delaware
General Corporation Law.
(xi) based upon all the facts and circumstances existing as of
the date of each distribution of WRAMCO described in this paragraph
and also as of the Closing Date, including representations contained
in officer certificates made as of the Closing Date, (A) pursuant to
Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code"), no gain or loss was recognized to (and no amount was
included in the income of WRSCO or WRI upon the distribution of 100%
of the issued and outstanding stock of WRAMCO (the "WRAMCO STOCK")
by WRSCO, (B) pursuant to Section 355 of the Code, no gain or loss
was recognized to (and no amount was included in the income of) the
Company or WRSCO
14
upon the distribution of the WRAMCO Stock by WRSCO to the Company,
(C) pursuant to Section 355 of the Code, no gain or loss was
recognized to (and no amount included in the income of) the Company,
Liberty National Life Insurance Company ("LIBERTY") or Torchmark
upon the distribution of the WRAMCO Stock by the Company to Liberty
and Torchmark, and (D) pursuant to Section 355 of the Code, no gain
or loss was recognized to (and no amount was included in the income
of) Liberty or Torchmark upon the distribution of the WRAMCO Stock
by Liberty to Torchmark; provided, however, that Liberty increased
its taxable income by the amount of the distribution considered to
be made from Liberty's policy holders surplus account pursuant to
Section 815 of the Code.
(xii) based upon all the facts and circumstances existing as
of the date of the distribution of UILIC described in this paragraph
and also as of the Closing Date, including representations contained
in the officer certificates made as of the Closing Date, pursuant to
Section 355 of the Code, no gain or loss will be recognized to (and
no amount will be included in the income of) the Company, Liberty or
Torchmark upon the distribution of 100% of the issued and
outstanding stock of UILIC by the Company to Liberty and Torchmark.
(xiii) any loans made to officers or employees of the Company
enabling such officers or employees to participate in the Directed
Share Program will not violate Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
(xiv) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein
as to which such counsel need not express any opinion) comply as to
form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (B)
has no reason to believe that (except for financial statements and
schedules and other financial and statistical data as to which such
counsel need not express any belief) the Registration Statement and
the prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (C) has no reason to believe that (except for
financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
15
(d) The Underwriters shall have received on the Closing Date an
opinion of Dechert Price & Xxxxxx, special outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Offering will not constitute an "assignment" as
defined in the Investment Company Act and the Advisers Act of any of
the investment advisory contracts to which WRI or WRIMCO is a
party.
(ii) each of WRI and WRIMCO is duly registered as an
investment adviser under the Advisers Act. No other subsidiary of
the Company is required to be registered as an investment adviser
under the Advisers Act and the rules and regulations of the
Commission promulgated thereunder. WRI is duly registered, licensed
or qualified as a broker-dealer under all federal laws requiring any
such registration, licensing or qualification. None of the Company's
other direct or indirect subsidiaries is required to be registered,
licensed or qualified as a broker-dealer under any federal law
requiring any such registration, licensing or qualification.
(iii) none of the Company or its direct or indirect
subsidiaries including WRI and WRIMCO is required to be registered,
licensed or qualified as an investment adviser under the laws of any
state.
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx X. Xxxxxx, General Counsel to the Company, dated the
Closing Date to the effect that:
(i) each subsidiary of the Company listed in Exhibit 21.1 to
the Registration Statement (a "COMPANY SUBSIDIARY") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole;
(ii) all of the issued shares of capital stock of each
Company Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the
Company, and to the best knowledge of counsel, are free and clear of
all liens, encumbrances, equities or claims;
16
(iii) each of WRI and WRIMCO is duly registered as an
investment adviser under the Advisers Act. No other subsidiary of
the Company is required to be registered as an investment adviser
under the Advisers Act and the rules and regulations of the
Commission promulgated thereunder. WRI is duly registered, licensed
or qualified as a broker-dealer in each United States jurisdiction
where the conduct of its business requires such registration and is
in compliance in all material respects with all United States
federal and state laws requiring any such registration, licensing or
qualification. None of the Company's other direct or indirect
subsidiaries is required to be registered, licensed or qualified as
a broker-dealer under the laws requiring any such registration,
licensing or qualification in any state in which it or its
subsidiaries conduct business. To the best knowledge of counsel,
each of the Company, WRI and WRIMCO is in compliance with all laws,
regulations, ordinances and rules (including those of any non-
governmental self-regulatory agencies) applicable to it or its
operations relating to investment advisory or broker dealer
activities except where any failure by the Company or any subsidiary
to comply with any such law, regulation, ordinance or rule would not
have, individually, or in the aggregate, a material adverse effect
on the Company and its subsidiaries, taken as a whole;
(iv) none of the Company or its direct or indirect
subsidiaries including WRI and WRIMCO is required to be registered,
licensed or qualified as an investment adviser under the laws of any
state.
(f) The Underwriters shall have received on the Closing Date an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 5(c)(iv), 5(c)(v), 5(c)(vii) (but only as to the statements in
the Prospectus under "Description of Capital Stock" and "Underwriters")
and 5(c)(xiv) above.
With respect to Section 5(c)(xiv) above, Xxxxxx & Xxxx, L.L.P.,
and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP may state that their opinion
and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are
without independent check or verification, except as specified.
The opinions of Xxxxxx & Xxxx, L.L.P., Dechert Price & Xxxxxx and
Xxxxxx X. Xxxxxx described respectively in Sections 5(c), 5(d) and 5(e)
above shall be rendered to the Underwriters at the request of the Company
and shall so state therein.
17
(g) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from KPMG Peat Marwick LLP, independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the
letter deliVered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and each shareholder of the Company
relating to sales and certain other dispositions of shares of Class A
Common Stock or certain other securities, delivered to you on or before
the date hereof, shall be in full force and effect on the Closing
Date.
(i) The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the
due authorization and issuance of the Additional Shares and other matters
related to the issuance of the Additional Shares.
6. Covenants of the Company and Torchmark. In further
consideration of the agreements of the Underwriters herein contained, the
Company and, with respect to paragraph (f) below, Torchmark, covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, eight signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 10:00 a.m. New York City time on the business
day next succeeding the date of this Agreement and during the period
mentioned in Section 6(c) below, as many copies of the Prospectus and
any supplements and amendments thereto or to the Registration Statement
as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement
to which you reasonably object, and to file with the Commission within
the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
18
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its
own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 1999 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of
the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of
the Company's counsel and the Company's accountants in connection with
the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing
of the Registration Statement, any preliminary prospectus, the Prospectus
and amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky memorandum in connection with the offer and sale
of the Shares under state securities laws and all expenses in connection
with the qualification of the Shares for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with the Blue Sky
memorandum, (iv) all filing fees and the reasonable fees and
disbursements of
19
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association
of Securities Dealers, Inc., (v) all fees and expenses in connection with
the preparation and filing of the registration statement on Form 8-A
relating to the Class A Common Stock and all costs and expenses incident
to listing the Shares on the New York Stock Exchange, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs
and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering
of the Shares, including, without limitation, expenses associated with
the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, (ix)
all expenses in connection with any offer and sale of the Shares outside
of the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers
and sales outside of the United States, and (x) all other costs and
expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section, Section
7 entitled "Indemnity and Contribution", and the last paragraph of
Section 9 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
(g) That in connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of five months following the date of
the effectiveness of the Registration Statement. Xxxxxx Xxxxxxx will
notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(h) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
20
7. Indemnity and Contribution. (a) Torchmark and the Company,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
(b) The Company agrees to indemnify and hold harmless Xxxxxx Xxxxxxx
and each person, if any, who controls Xxxxxx Xxxxxxx within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange
Act ("XXXXXX XXXXXXX ENTITIES"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by the failure of
any Participant to pay for and accept delivery of the shares which,
immediately following the effectiveness of the Registration Statement,
were subject to a properly confirmed agreement to purchase; or (ii)
related to, arising out of, or in connection with the Directed Share
Program, provided that, the Company shall not be responsible under this
subparagraph (ii) for any losses, claim, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of Xxxxxx Xxxxxxx
Entities.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless Torchmark and the Company, their directors, their
officers who sign the Registration Statement and each person, if any, who
controls the Company or Torchmark within the meaning of either Section 15
of the Securities
21
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from Torchmark and the Company to such Underwriter, but only
with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use
in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 7(a) or 7(b), such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect
of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to any
local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case
of parties indemnified pursuant to Section 7(a), and by Torchmark and the
Company, in the case of parties indemnified pursuant to Section 7(b). The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
22
Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 7(b) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm (in addition to any local counsel)
for Xxxxxx Xxxxxxx for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control Xxxxxx Xxxxxxx within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act.
(e) To the extent the indemnification provided for in Section 7(a),
7(b) or 7(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by Torchmark and
the Company on the one hand and the Underwriters on the other hand from
the offering of the Shares or (ii) if the allocation provided by clause
7(e)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause 7(e)(i) above but also the relative fault of Torchmark and the
Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by Torchmark and the
Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear
to the aggregate Public Offering Price of the Shares. The relative fault
of Torchmark and the Company on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by Torchmark or the Company or by the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this
Section 7 are several in proportion to the respective number of Shares
they have purchased hereunder, and not joint.
(f) Each of Torchmark, the Company and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take
23
account of the equitable considerations referred to in Section 7(e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilt y of such
fraudulent misrepresentation. The remedies provided for in this Section 7
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of
Torchmark and the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
24
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or Torchmark
to comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Company or Torchmark shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
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10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
26
Very truly yours,
TORCHMARK CORPORATION
By:
-------------------------------------------
Name: X. X. Xxxxxx
Title: Chairman and Chief Executive
Officer
XXXXXXX & XXXX FINANCIAL, INC.
By:
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman of the Board and Chief
Executive Officer
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX, SACHS & CO.
XXXXXXX XXXXX & CO.
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
27
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX SACHS INTERNATIONAL
XXXXXXX XXXXX INTERNATIONAL
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
28
SCHEDULE I
U.S. UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated 4,320,000
Xxxxxxx, Sachs & Co. 4,320,000
Xxxxxxx Xxxxx & Co. 4,320,000
Xxxxxx X. Xxxx & Company 200,000
Xxxxxxx X. Xxxxxxxxx & Co., Inc. 800,000
CIBC Xxxxxxxxxxx Corp. 800,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation 800,000
Xxx-Xxxx Xxxxxx Inc. 800,000
Xxxxxx Xxxxxxxxxx Xxxxx Inc. 200,000
Xxxxxx Xxxxxx & Company, Inc. 200,000
Xxxxx Xxxxxxx Inc. 200,000
The Xxxxxxxx-Xxxxxxxx Company, LLC 200,000
Xxxxxxxx Inc. 200,000
----------
Total U.S. Firm Shares .............. 17,360,000
==========
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SCHEDULE II
INTERNATIONAL UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Xxxxxx Xxxxxxx & Co. International Limited 1,200,000
Xxxxxxx Sachs International 1,200,000
Xxxxxxx Xxxxx International 1,200,000
Xxxxxxx X. Xxxxxxxxx & Co., Inc. 370,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx International 370,000
---------
Total International Firm Shares ...... 4,340,000
=========
30
EXHIBIT A
FORM OF LOCK-UP LETTER
____________, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxxxx Xxxxx International
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") and Xxxxxx Xxxxxxx & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with Xxxxxxx & Xxxx Financial, Inc., a Delaware corporation (the "COMPANY")
providing for the public offering (the "PUBLIC OFFERING") by the several
Underwriters, including Xxxxxx Xxxxxxx and MSIL (the "UNDERWRITERS"), of
[ ] shares (the "SHARES") of the Class A common stock, $.01 par value per
share of the Company (the "CLASS A COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period ending
180 days after the date of the final prospectus (the "PROSPECTUS") relating to
the Public Offering (the "LOCK-UP PERIOD"), (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase
31
any option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Class A Common Stock or any securities convertible into or exercisable or
exchangeable for Class A Common Stock, or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Class A Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Class A Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any Shares to the
Underwriters pursuant to the Underwriting Agreement, (b) the issuance by the
Company of shares of Class A Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof of which
the Underwriters have been advised in writing, (c) transactions by any person
other than the Company or Torchmark Corporation ("TORCHMARK") relating to shares
of Class A Common Stock or other securities acquired in open market transactions
after completion of the Offering, (d) options on shares of Class A Common
Stock issued in connection with employee benefit plans as described in the
Prospectus or (e) the issuance of Class A Common Stock as payment for
acquisitions by the Company, if all persons or entities receiving shares of
Class A Common Stock pursuant to this clause (e) agree to be subject to the
restrictions in clauses (i) and (ii) above for the remainder of the Lock-up
Period.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation among the Company, Torchmark and the Underwriters.
Very truly yours,
----------------------------------------------
(Name)
----------------------------------------------
(Address)
32
