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SURETY CAPITAL CORPORATION
2,100,000 SHARES*
COMMON STOCK
______________
UNDERWRITING AGREEMENT
______________
February 21, 1996
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*Plus an option to purchase from the Company up to 288,759 additional shares to
cover over allotments.
SURETY CAPITAL CORPORATION
2,100,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
February 21, 1996
Xxxxxx & Xxxxxx Incorporated
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Surety Capital Corporation, a Delaware
corporation (the "COMPANY"), proposes to issue and sell 1,925,061 shares
("PRIMARY SHARES") of its authorized but unissued Common Stock, par value
$.01 per share ("COMMON STOCK"), and Anchorage Fire and Casualty Insurance
Company, in Liquidation acting through Xxxxxx Xxxxxx Xxxxxx, Special Deputy
Commissioner and Liquidator, ("SELLING SHAREHOLDER") proposes to sell 174,939
shares of Common Stock ("SECONDARY SHARES"), to Xxxxxx & Xxxxxx Incorporated
("UNDERWRITER"). In addition, the Company proposes to grant to the
Underwriter an option to purchase up to 288,759 additional shares of Common
Stock ("ADDITIONAL SHARES") as provided in Section 5 hereof. The Primary
Shares and the Secondary Shares are referred to herein as the "FIRM SHARES;"
the Firm Shares and, to the extent such option is exercised, the Additional
Shares, are hereinafter collectively referred to as the "SHARES."
You have advised the Company that you propose to make a public offering of
the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if it has not yet become effective,
and the Pricing Agreement hereinafter defined has been executed and delivered.
_______________
* Plus an option to acquire up to 288,759 additional shares to cover over
allotments.
Prior to the purchase and public offering of the Shares by the Underwriter,
the Company, the Selling Shareholder and the Underwriter shall enter into an
agreement substantially in the form of Exhibit A hereto ("PRICING AGREEMENT").
The Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company, the Selling Shareholder and the
Underwriter and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this
Agreement, as supplemented by the Pricing Agreement. From and after the date of
the execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The Company and the Selling Shareholder hereby confirm their agreements
with respect to the purchase of the Shares by the Underwriter as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Underwriter that:
(a) A registration statement on Form S-1 (File No. 33-64789) and a
related preliminary prospectus with respect to the Shares have been prepared and
filed with the Securities and Exchange Commission ("COMMISSION") by the Company
and in conformity with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "1933 ACT"; all references herein to specific rules are rules
promulgated under the 0000 Xxx); and the Company has so prepared and has filed
such amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof. In the event that the Company
determines to rely upon Rule 430A, the Company will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. There have been or will
promptly be delivered to you two signed copies of such registration statement
and amendments, including the exhibits filed therewith, and such number of
conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and final
forms of prospectus as the Underwriter may reasonably request.
The registration statement and prospectus, as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), are hereinafter
called the "REGISTRATION STATEMENT" and the "PROSPECTUS", respectively, except
that if the prospectus filed by the Company pursuant to Rule 424(b) differs from
the prospectus on file at the time the Registration Statement became or becomes
effective, the term "PROSPECTUS" shall refer to the Rule 424(b) prospectus from
and after the time it is filed with the Commission or transmitted to the
Commission for filing.
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The Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder are hereinafter collectively
referred to as the "EXCHANGE ACT."
(b) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus, and each preliminary
prospectus has conformed in all material respects with the requirements of
the 1933 Act and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. When the Registration Statement became or becomes effective,
and at the First Closing Date and the Second Closing Date hereinafter
defined, as the case may be, the Registration Statement, including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), and the Prospectus and any amendments
or supplements thereto, in all material respects conformed or will in all
material respects conform to the requirements of the 1933 Act, and neither
the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, included or will include any untrue statement of a
material fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representation or warranty as to
information contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriter specifically for use in the
preparation thereof.
(c) The Company and each of its subsidiaries, and First Midlothian
Corporation, a Texas corporation ("FIRST MIDLOTHIAN"), and each of its
subsidiaries, including, without limitation, Midlothian Bank, National
Association ("MIDLOTHIAN BANK"), have been duly incorporated and are validly
existing as corporations or banks in good standing under the laws of their
respective jurisdictions of incorporation, with full power and authority to own
or lease their properties and conduct their businesses as described in the
Prospectus; the Company's only subsidiaries are those listed on Exhibit 22 of
the Registration Statement; the Company and each of its subsidiaries, and First
Midlothian and each of its subsidiaries, are duly qualified to do business as
foreign corporations under the corporation law of, and are in good standing as
such in, each jurisdiction in which they own or lease substantial properties,
have an office, or in which substantial business is conducted and such
qualification is required except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect upon the
condition (financial or otherwise), earnings, affairs, business or prospects of
the Company and its subsidiaries, or First Midlothian and its subsidiaries, as
the case may be, taken as a whole ("MATERIAL ADVERSE EFFECT"); and no proceeding
of which the Company has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit
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or curtail, such power and authority or qualification. Surety Bank, National
Association, a subsidiary of the Company ("Surety Bank") and
Midlothian Bank are referred to herein as the "BANKS."
(d) The Company has an authorized and outstanding capitalization
as set forth in the Prospectus under "Capitalization" and the Shares conform
in all material respects to the description thereof contained in the
Prospectus. All of the issued and outstanding shares of Common Stock have
been duly authorized, validly issued and are fully paid and non-assessable
and free of preemptive or other similar rights and there are no options,
agreements, contracts or other rights in existence to acquire from the
Company any shares of Common Stock, except as set forth in the Prospectus.
Except as set forth in the Prospectus, there are no holders of the securities
of the Company having rights to the registration thereof. The Company and
First Midlothian have no banking subsidiaries other than Surety Bank and
Midlothian Bank, respectively. All of the capital stock of each subsidiary
of the Company, other than Surety Bank, has been duly authorized, validly
issued and is fully paid and non-assessable. First Midlothian has no
subsidiaries, other than Midlothian Bank. All of the outstanding capital
stock of each of the Banks has been duly authorized, validly issued and is
fully paid and, subject to 12 U.S.C. Section 55 (1982), nonassessable. Each
of the Company and First Midlothian, directly or indirectly, owns of record
and beneficially, free and clear of any liens, claims, encumbrances or rights
of others, all of the issued and outstanding shares of each of its respective
subsidiaries, except as referred to in the Prospectus. There are no options,
agreements, contracts or other rights in existence to purchase or acquire
from the Company or its subsidiaries, or First Midlothian or its
subsidiaries, any issued and outstanding shares of the capital stock of such
subsidiaries.
(e) The Primary Shares to be sold by the Company pursuant to this
Agreement and the Pricing Agreement have been duly authorized and, when issued
and paid for in accordance with this Agreement and the Pricing Agreement, will
be validly issued, fully paid and non-assessable; the Secondary Shares to be
sold by the Selling Shareholder are duly authorized, validly issued, fully paid
and non-assessable; the Shares are not subject to the preemptive rights of any
shareholder of the Company; the holders of the Shares will not be subject to
personal liability by reason of being such holders; and all corporate actions
required to be taken for the authorization, issue and sale of the Primary Shares
have been validly and sufficiently taken.
(f) The execution, delivery and performance by the Company of this
Agreement and the Pricing Agreement have been duly authorized by all necessary
corporate action on the part of the Company and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or bylaws (as
amended) and do not and will not constitute or result in the breach of, or be in
violation of, any of the terms or provisions of or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or its subsidiaries under
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any material agreement, franchise, license, indenture, lease, mortgage, deed
of trust, or other instrument to which the Company or any subsidiary is a
party or by which the Company, any subsidiary or the property of any of them
may be bound or affected, or any law, order, judgment, decree, rule or
regulation applicable to the Company or any subsidiary of any government,
governmental instrumentality, court or regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or
any subsidiary or any of their respective properties, or any order of any
court or governmental agency or other regulatory authority entered in any
proceeding to which the Company or any subsidiary was or is now a party or by
which it is bound. No consent, approval, authorization or other order of or
filing with, any court, regulatory body, administrative agency or other
governmental body is legally required for the execution and delivery of this
Agreement or the Pricing Agreement by the Company or the consummation by the
Company of the transactions contemplated herein or therein, except as may be
required under or by the 1933 Act, the American Stock Exchange, Inc. or the
blue sky laws of the various jurisdictions. This Agreement and the Pricing
Agreement have been duly authorized, executed and delivered by the Company
and constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms except insofar as (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to creditors'
rights generally; (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding thereafter may be
brought; and (iii) such enforcement may be subject to any limitations under
applicable law which relate to the indemnification and contribution
provisions of this Agreement.
(g) Each of Coopers & Xxxxxxx LLP and Samson, Xxxxxxx & Associates,
P.L.L.C., who have expressed their opinion with respect to certain of the
financial statements included in the Registration Statement, are independent
accountants within the meaning of the 1933 Act.
(h) The consolidated financial statements, together with the notes
thereto, of the Company and First Midlothian included in the Registration
Statement comply in all material respects with the 1933 Act and present fairly
the consolidated financial position of the Company and First Midlothian,
respectively, as of the respective dates of such financial statements
(including, without limitation, the allowance for possible loan losses), and the
consolidated results of operations and cash flows of the Company and First
Midlothian for the respective periods covered thereby, are in conformity with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed in the Prospectus; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements are required to be
included in the Registration Statement. The consolidated financial, statistical
and numerical information with respect to the Company and its subsidiaries, and
the financial
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and statistical information with respect to Surety Bank, set forth in the
Prospectus are fairly presented, were derived from the consolidated financial
statements or the books and records of the Company and its subsidiaries and
are prepared on a basis consistent with the audited financial statements of
the Company.
(i) The PRO FORMA financial information of the Company and its
subsidiaries included in the Registration Statement presents fairly the
information shown therein; has been compiled on a basis consistent with that of
the audited consolidated financial statements of the Company and its
subsidiaries and of First Midlothian and its subsidiaries included in the
Registration Statement; has been prepared in accordance with the Commission's
rules and guidelines with respect to PRO FORMA financial statements; and the
assumptions used in the preparation thereof are reasonable.
(j) Neither the Company nor any subsidiary thereof, nor either First
Midlothian or any subsidiary thereof, is in violation of its articles of
incorporation, articles of association, or bylaws, in each case as amended, or
in default under any consent decree, formal agreement, memorandum of
understanding or similar agreement, or in default with respect to any provision
of any lease, loan agreement, franchise, license, permit or other contractual
obligation to which it is a party or by which it or any of its properties may be
bound; there does not exist any state of facts which constitutes an event of
default by the Company as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default, except for any
such violation or default of the articles of incorporation, articles of
association, bylaws, consent decrees, formal agreements, memoranda of
understanding or similar agreements, or any lease, loan agreement, franchise,
license, permit or other contractual obligations referred to in this
subparagraph (j) which, either individually or in the aggregate, would not have
a Material Adverse Effect.
(k) Except as disclosed in the Prospectus, (A) there is no action,
suit or proceeding before or by any court or governmental or regulatory agency
or body, domestic or foreign, or any arbitrator or arbitration panel, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries, or First Midlothian or any of its
subsidiaries, including without limitation proceedings relating to
discrimination or environmental matters, which could result in a Material
Adverse Effect, and (B) there is no decree, judgment, order, formal agreement or
memorandum of understanding of any kind in existence applicable to the Company
or any of its subsidiaries, or First Midlothian or any of its subsidiaries, or
any of their respective officers, employees or directors, requiring or
restraining the taking of any actions of any kind in connection with the
business of the Company and its subsidiaries or First Midlothian or its
subsidiaries, respectively.
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(l) Each of the Company and First Midlothian is a bank holding
company duly registered with the Board of Governors of the Federal Reserve
System ("FEDERAL RESERVE BOARD") under the Bank Holding Company Act of 1956, as
amended. Each Bank is a national bank duly chartered and organized by authority
of the Office of the Comptroller of the Currency ("OCC"). The deposit accounts
of each Bank are insured by the Federal Deposit Insurance Corporation through
the Bank Insurance Fund to the fullest extent permitted by law, and all premiums
and assessments required in connection therewith have been paid by such Bank.
Since January 1, 1991, the Company and each Bank has filed all material reports
and amendments thereto that they were required to file with the Federal Reserve
Board, the OCC and any other federal or state regulatory authorities. Except as
set forth in the Prospectus, there is no unresolved material violation,
criticism or exception by any governmental or regulatory agency with respect to
any report or statement relating to any examinations of the Company or any of
its subsidiaries. The conduct of the business of the Company and each of its
subsidiaries is in compliance in all respects with applicable federal, state,
local and foreign laws and regulations, and all formal agreements, memoranda of
understanding and similar agreements with regulatory authorities, except where
the failure to be in compliance would not have a Material Adverse Effect. Each
of the Company and its subsidiaries, and each of First Midlothian and its
subsidiaries, own or possess or have obtained all governmental licenses,
permits, consents, orders, approvals and other authorizations necessary to lease
or own, as the case may be, and to operate their properties and to carry on
their businesses as presently conducted except where the failure to have any
such governmental licenses, permits, consents, orders, approvals and other
authorizations would not have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries, nor First Midlothian or any of its subsidiaries,
has received any written notice of proceedings related to revocation or
modification of any such licenses, permits, consents, orders, approvals or
authorizations which singly or in the aggregate, if the subject of an
unfavorable ruling or finding, would result in a Material Adverse Effect.
Except as disclosed in the Prospectus, none of the Company, First Midlothian or
the Banks is currently a party or subject to any agreement or memorandum with,
or directive or order issued by, the Federal Reserve Board, the OCC or any other
federal or state regulatory authorities, which imposes any material restrictions
or requirements not generally applicable to bank holding companies or commercial
banks.
(m) Each of the Company and its subsidiaries, and each of First
Midlothian and its subsidiaries, have valid and indefeasible title to all of the
properties and assets reflected as owned by them in the financial statements
hereinabove described (or described elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge, encumbrance or title defect of any kind except
those, if any, reflected in such financial statements (or described elsewhere in
the Prospectus) or which are not material to the Company and its subsidiaries,
or First Midlothian and its subsidiaries, as the case may be, taken as a whole.
Each of the Company and its subsidiaries, and each of First Midlothian
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and its subsidiaries, hold their respective leased properties that are
material to the Company and its subsidiaries, or First Midlothian and its
subsidiaries, respectively, taken as a whole under valid and binding leases.
(n) None of the Company or its subsidiaries has taken, and none
will take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under
the Exchange Act or otherwise, in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
(o) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (i) any material adverse change in the
condition (financial or otherwise), earnings, affairs, business or prospects of
the Company or its subsidiaries, or of the earnings, affairs, business or
prospects of First Midlothian or its subsidiaries, whether or not arising in
the ordinary course of business, (ii) any material transaction entered into, or
any material liability or obligation incurred, by the Company or its
subsidiaries or by First Midlothian or its subsidiaries other than in the
ordinary course of business, (iii) any change in the capital stock, or increase
in the short-term debt or long-term debt of the Company or its subsidiaries or
of First Midlothian or its subsidiaries, or (iv) any dividend or distribution of
any kind declared, paid or made by the Company or First Midlothian in respect of
its capital stock.
(p) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the 1933 Act which have not been described or filed as
required. The contracts so described in the Prospectus are in full force and
effect on the date hereof; and neither the Company nor any of the subsidiaries,
nor to the knowledge of the Company, any other party, is in breach of or default
under any of such contracts.
(q) The Company together with its subsidiaries, and First Midlothian
together with its subsidiaries, own and possess sufficient right, title and
interest in and to, or has duly licensed from third parties the right to use,
all trademarks, trade names, copyrights and other proprietary rights ("TRADE
RIGHTS") material to the business of the Company and each of its subsidiaries,
or First Midlothian and its subsidiaries, in each case taken as a whole. None
of the Company or any of its subsidiaries or First Midlothian or any of its
subsidiaries has received any written notice of infringement, misappropriation
or conflict from any third party as to such material Trade Rights which has not
been resolved or disposed of, and none of the Company or any of its
subsidiaries, or First Midlothian or any of its subsidiaries, has infringed,
misappropriated or otherwise conflicted with material
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Trade Rights of any third parties, which infringement, misappropriation or
conflict would have a Material Adverse Effect.
(r) All offers and sales of equity securities prior to the date
hereof by the Company, or any of its subsidiaries were at all relevant times
either exempt from the registration requirements of the 1933 Act and the
registration requirements of all applicable state securities or blue sky
laws, or were duly registered in accordance with the provisions thereof.
(s) Each of the Company and its subsidiaries, and each of First
Midlothian and its subsidiaries, has timely filed all necessary federal and
state income and franchise tax returns required to be filed through the date
hereof and have paid all taxes shown as due thereon, and there is no tax
deficiency that has been, or to the knowledge of the Company might reasonably be
expected to be, asserted against the Company or any of its subsidiaries or any
of their properties or assets, or against First Midlothian or any of its
subsidiaries or any of their properties or assets, that could reasonably be
expected to have a Material Adverse Effect.
(t) The Company's Common Stock is registered pursuant to
Section 12(b) of the Exchange Act, and listed for trading on the American Stock
Exchange, Inc. ("AMEX"). The Company has filed an additional listing
application with the Amex with respect to the Primary Shares, and has received
notification from the Amex that the listing of the Primary Shares has been
approved, subject to notice of issuance or sale thereof.
(u) Neither the Company nor any of its subsidiaries (and neither
First Midlothian nor any of its subsidiaries) is, and neither the Company nor
any of its subsidiaries intends to conduct its business in a manner in which it
would become, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(v) No labor dispute with the employees of the Company or any of
its subsidiaries, or with the employees of First Midlothian and its
subsidiaries, is pending or, to the knowledge of the Company, threatened that
could reasonably be expected to have a Material Adverse Effect. Each employee
benefit plan within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), for which the Company or any subsidiary,
acts as sponsor within the meaning of ERISA is and has been in all material
respects operated and administered in accordance with the provisions of ERISA
and applicable law. The present value of all benefits vested under each
employee benefit plan which is subject to Title IV of ERISA did not exceed,
as of the end of the most recent plan year, the value of the assets of the
plan allocable to such vested or accrued benefits, and no such plan or any
trust created thereunder has incurred any "accumulated funding deficiency"
within the meaning of the Internal
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Revenue Code ("CODE") since the effective date of ERISA. No employee benefit
plan or any trust created thereunder or any trustee fiduciary or
administrator thereof has engaged in a "prohibited transaction" within the
meaning of the Code or ERISA or violated any of the fiduciary standards of
ERISA, and there has been no "reportable event" within the meaning of ERISA
with respect to any such plan. Neither First Midlothian nor its subsidiary
maintains an employee benefit plan within the meaning of ERISA.
(w) Each of the Company and its subsidiaries, and, to the
knowledge of the Company, each of First Midlothian and its subsidiaries, (A)
makes and keeps books, records and accounts which, in reasonable detail and
in all material respects, accurately and fairly reflect its transactions and
dispositions of its assets and (B) maintains 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 (i) to permit the preparation of
financial statements in conformity with generally accepted accounting
principles consistently applied or any other criteria applicable to such
statements and (ii) to maintain accountability for assets, (3) access to
assets is permitted only in accordance with management's general or specific
authorizations and (4) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(x) Except as disclosed in the Prospectus, (A) none of the Company,
First Midlothian or any of their respective subsidiaries is presently engaged in
negotiations for the acquisition of all or a portion of the stock or other
equity interest or all or a portion of the assets of any person (including
without limitation any company, corporation, partnership, limited liability
company, partnership, joint venture or sole proprietorship), and (B) has no
agreements or understandings with respect to the acquisition of all or a portion
of the stock or other equity interest or all or portion of the assets of any
specific person.
(y) Except as disclosed in the Prospectus, as of the date of the
Prospectus and as of each Closing Date, (A) no extension of credit made by
either Bank to an executive officer, director, or affiliate of the Company,
First Midlothian or either of the Banks is (1) delinquent, past due, on non-
accrual status or non-performing, (2) identified as a potential problem loan on
any internal "watch list" or (3) constitutes a restructured loan; and (B) all
extensions of credit to any director or executive officer or any member of their
immediate family (1) were made in the ordinary course of business, (2) were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and
(3) did not involve more than the normal risk of collectibility or present other
unfavorable features.
(z) That certain Reorganization Agreement dated October 17, 1995
among First Midlothian, Midlothian Bank, the directors of Midlothian Bank in
their individual and representative capacities and the Company covering the
transactions between
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the Company, First Midlothian and Midlothian Bank described in the Prospectus
under the caption "The Midlothian Bank Acquisition -- The Reorganization
Agreement" and the transactions contemplated thereby have been authorized by
all necessary corporate action on the part of the Company, been executed and
delivered by the Company and the other parties thereto and constitutes a
valid and binding obligation of the Company (assuming the due authorization,
execution and delivery thereof by the other parties thereto) enforceable
against the Company in accordance with its terms, except insofar as (i) such
agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws relating to creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding thereafter may be brought.
(aa) The Company intends to apply the net proceeds from the sale of
the Primary Shares for the purposes set forth in the Prospectus under the
caption "Use of Proceeds."
(bb) Since January 1, 1991 the Company has, and at each Closing Date
the Company will have, made all filings required to be made by it under the
Exchange Act; and all such filings conformed and will conform in all material
respects to the requirements of the Exchange Act, and none of such filings
contained an untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in lieu of the circumstances under which they were made, not misleading.
(cc) The Company is not required to comply with Florida Statute
Section 517.075.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER.
The Selling Shareholder represents and warrants to the Company and the
Underwriter, that:
(a) The Selling Shareholder has placed in custody under a Custody
Agreement ("Custody Agreement") with Securities Transfer Corporation, as
Custodian ("Custodian"), for delivery under this Agreement, certificates in
negotiable form representing the Secondary Shares to be sold by the Selling
Shareholder hereunder. The Selling Shareholder specifically agrees that the
Secondary Shares represented by the certificates so held in custody for such
Selling Shareholder are subject to the interests of the Underwriter
hereunder, that the arrangements made by the Selling Shareholder for such
custody are to that extent irrevocable and not subject to termination and
that the obligations of the Selling Shareholder hereunder shall not be
terminated by any act of the Selling Shareholder, by operation of law, or by
the occurrence of any other event.
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(b) All consents, approvals, authorizations and orders necessary for
the execution and delivery by the Selling Shareholder of this Agreement, and for
the sale and delivery of the Secondary Shares to be sold by the Selling
Shareholder hereunder, have been obtained; and the Selling Shareholder has full
right, power and authority to enter into this Agreement and to sell, assign,
transfer and deliver the Shares to be sold by the Selling Shareholder hereunder.
(c) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Selling Shareholder and constitute
valid and binding obligations of the Selling Shareholder enforceable against the
Selling Shareholder in accordance with their terms except insofar as (i) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding thereafter may be brought; and (ii) such enforcement
may be subject to any limitations under applicable law which relate to the
indemnification and contribution provisions of this Agreement.
(d) The sale of the Secondary Shares to be sold by the Selling
Shareholder hereunder and the compliance by the Selling Shareholder with all
of the provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Shareholder is a party or by
which the Selling Shareholder is bound, or to which any of the property or
assets of the Selling Shareholder is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Selling Shareholder or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Selling Shareholder or the property of the Selling Shareholder.
(e) The Selling Shareholder has, and immediately prior to each Time
of Delivery (as defined in Section 5 hereof) the Selling Shareholder will have,
good and valid title to the Shares to be sold by the Selling Shareholder
hereunder, free and clear of all liens, encumbrances, equities or claims; and,
upon delivery of such Shares and payment therefor pursuant hereto, good and
valid title to such Shares, free and clear of all liens, encumbrances, equities
or claims, will pass to the Underwriter.
(f) The information pertaining to the Selling Shareholder under
the caption "Selling Shareholder" in the Prospectus does not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
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(g) In order to document the Underwriter's compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(h) The Selling Shareholder has not taken, nor will it take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any security
of the Company to facilitate its sale or resale of the Shares.
(i) The Selling Shareholder agrees to cooperate to the extent
reasonably necessary to cause the Registration Statement and any post-effective
amendment thereto to become effective at the earliest possible time. The
Selling Shareholder agrees to do or perform all things reasonably required to be
done or performed by the Selling Shareholder prior to the First Closing Date to
satisfy all conditions precedent to the delivery of and the payment for the
Secondary Shares being sold by the Selling Shareholder pursuant to this
Agreement.
SECTION 4. REPRESENTATION AND WARRANTY OF THE UNDERWRITER. The
Underwriter represents and warrants to the Company that the information set
forth with respect to the Shares (a) on the cover page of the Prospectus with
respect to price, underwriting discount and terms of the offering and (b) under
"Underwriting" in the Prospectus constitutes the only information furnished to
the Company by and on behalf of the Underwriter for use in connection with the
preparation of the Registration Statement and such information is correct in all
material respects.
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. (a) On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
to the Underwriter, and the Selling Shareholder agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company and the
Selling Shareholder, the Firm Shares. The purchase price per share to be paid
by the Underwriter to the Company and the Selling Shareholder shall be the price
per share set forth in the Pricing Agreement.
Delivery of certificates for the Firm Shares to be purchased by the
Underwriter and payment therefor shall be made at the offices of Xxxxxx & Xxxxxx
Incorporated, 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or
such other place as may be agreed upon by the Company and the Underwriter) at
such time and date, not later than the
-13-
third full business day following the first date that any of the Common
Shares are released by you for sale to the public, as you shall designate by
at least 48 hours prior notice to the Company (the "First Closing Date");
provided, however, that if the Prospectus is at any time prior to the First
Closing Date recirculated to the public, the First Closing Date shall occur
upon the later of the third full business day following the first date that
any of the Common Shares are released by you for sale to the public or the
date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Shares shall be made by or on behalf
of the Company and the Selling Shareholder to you, against payment by you of the
purchase price therefor by certified or official bank checks payable in next day
funds to the order of the Company and the Selling Shareholder. The certificates
for the Firm Shares shall be registered in such names and denominations as you
shall have requested at least two full business days prior to the First Closing
Date, and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriter.
(b) In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriter to purchase up to
an aggregate of 288,759 additional Shares, at the same purchase price per share
to be paid for the Firm Shares, for use solely in covering any over allotments
made by the Underwriter in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time (but not more than once),
in whole or in part, within 30 days after the date of the final Prospectus upon
written notice by you to the Company setting forth the aggregate number of
Additional Shares as to which the Underwriter is exercising the option, the
names and denominations in which the certificates for such shares are to be
registered and the time and place at which such certificates will be delivered.
Such time of delivery (which may not be earlier than the First Closing Date),
being herein referred to as the "SECOND CLOSING DATE," shall be determined by
you, but if at any time other than the First Closing Date, shall not be earlier
than three nor later than ten full business days after delivery of such notice
of exercise. Certificates for the Additional Shares will be made available at
the Company's expense for checking and packaging at 9:00 A.M., local time, on
the first full business day preceding the Second Closing Date at a location in
New York, New York as may be designated by you. The manner of payment for and
delivery of the Additional Shares shall be the same as for the Firm Shares as
specified in Section 5(a).
(c) If the Company has elected not to rely upon Rule 430A, the initial
public offering price of the Shares and the purchase price per share to be paid
by the Underwriter
-14-
for the Shares shall have each been determined and set forth in the Pricing
Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectus will be filed before the Registration Statement
becomes effective.
(d) If the Company has elected to rely upon Rule 430A, the purchase price
per share to be paid by the Underwriter for the Shares shall be an amount equal
to the initial public offering price, less an amount per share to be determined
by agreement between the Underwriter and the Company. The initial public
offering price per share of the Shares shall be a fixed price to be determined
by agreement between the Underwriter and the Company. The initial public
offering price per share and the purchase price, when so determined, shall be
set forth in the Pricing Agreement. In the event that such prices have not been
agreed upon and the Pricing Agreement has not been executed and delivered by the
parties thereto by the close of business on the second business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed to by the
Company, the Selling Shareholder and the Underwriter.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective. The Company will advise you promptly of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement (and make every reasonable effort to obtain the
withdrawal of such order as early as possible) or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, and will also advise you
promptly of any request of the Commission for amendment or supplement of the
Registration Statement, of any preliminary prospectus or of the Prospectus, or
for additional information, and will not file any amendment or supplement to the
Registration Statement, to any preliminary prospectus or to the Prospectus of
which you have not been furnished with a copy prior to such filing or to which
you reasonably object.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act, any event occurs as a result of
which the Prospectus, including any amendments or supplements, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements thereto and including any revised prospectus which the Company
proposes for use by the Underwriter in connection with the offering of the
Shares which differs from the prospectus on file with the Commission at the time
of effectiveness
-15-
of the Registration Statement, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) to comply with the 1933 Act, the
Company promptly will advise you thereof and will promptly prepare and, if
required pursuant to Rule 424(b), file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(c) Neither the Company nor any of its subsidiaries will, prior to
the earlier of the Second Closing Date or termination or expiration of the
related option, incur any material liability or obligation, direct or
contingent, or enter into any material transaction, other than in the ordinary
course of business, except as contemplated by the Prospectus.
(d) The Company will not declare or pay any dividend or make any
other distribution upon the Common Stock payable to shareholders of record on a
date prior to the earlier of the Second Closing Date or termination or
expiration of the related option, except as contemplated by the Prospectus.
(e) Not later than 90 days after the close of the period covered
thereby, the Company will make generally available to its security holders an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the 1933
Act and Rule 158 thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an Underwriter or
dealer, the Company will furnish to you at its expense (and consents to the use
thereof), subject to the provisions of subsection (b) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the purposes
contemplated by the 1933 Act.
(g) The Company will cooperate with the Underwriter in qualifying or
registering the Shares for sale under the blue sky laws of such jurisdictions as
you designate, and will continue such qualifications in effect so long as
reasonably required for the distribution of the Shares. The Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not currently qualified
or where it would be subject to taxation as a foreign corporation.
(h) During the period of three years after the date of the Pricing
Agreement, the Company will furnish to the Underwriter a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company with
the Commission, any
-16-
securities exchange or the NASD and (ii) as soon as available, of each report
of the Company mailed to any class of its securityholders.
(i) The Company will use the net proceeds received by it from the
sale of the Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds."
(j) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule 430A,
then immediately following the execution and delivery of the Pricing Agreement,
the Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.
(k) The Company will comply with all of the provisions of each
undertaking contained in the Registration Statement.
(l) The Company will not, without the prior written consent of the
Underwriter, sell, contract to sell or otherwise dispose of any equity
security of the Company (including shares of Common Stock) for a period of
180 days after the effective date of the Registration Statement, other than
(i) Common Stock issued and sold to the Underwriter pursuant to this
Agreement, and (ii) Common Stock issued upon exercises of outstanding stock
options granted under the Company's 1988 Stock Option Plan or 1995 Stock
Option Plan (as such terms are defined in the Prospectus) in the aggregate
not to exceed 156,000 shares of Common Stock. The Company will cause each of
its executive officers and directors to deliver to the Underwriter on or
before the date of this Agreement an agreement satisfactory in form and
substance to the Underwriter and its counsel, whereby each agrees, for a
period of 180 days after the effective date of the Registration Statement,
not to offer, sell or otherwise dispose of any shares of Common Stock without
the prior written consent of the Underwriter ("LOCK-UP LETTER").
SECTION 7. PAYMENT OF EXPENSES. (a) The Company will pay, or reimburse if
paid by the Underwriter, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the performance by the Company of its obligations under this Agreement and the
Pricing Agreement, including, without limiting the generality of the foregoing,
(i) preparation, printing, filing and distribution (including postage, air
freight charges and charges for counting and packaging)
-17-
of the Registration Statement, each preliminary prospectus, the Prospectus,
each amendment and/or supplement to any of the foregoing, and this Agreement
and the Selected Dealers Agreement; (ii) the furnishing to the Underwriter
and dealers of copies of the foregoing materials (provided, however, that any
such copies furnished by the Company more than nine months after the first
date upon which the Shares are offered to the public shall be at the expense
of the Underwriter or dealer so requesting as provided in paragraphs 6(b)
above); (iii) the registrations or qualifications referred to in paragraph
6(g) above (including reasonable fees and disbursements of counsel in
connection therewith) and expenses of printing and delivering to the
Underwriter copies of the preliminary and final Blue Sky memoranda, provided
that in no event shall the Company be required to pay in excess of $15,000
with respect to the fees, disbursements and expenses referred to in this
clause (iii), exclusive of filing fees; (iv) the review of the terms of the
public offering of the Shares by the NASD (including the filing fees paid to
the NASD in connection therewith); (v) the performance by the Company of its
other obligations under this Agreement, including the fees of the Company's
counsel and accountants; (vi) the issuance of the Shares and the preparation
and printing of the stock certificates representing the Shares including any
stamp taxes payable in connection with the original issuance of the Shares;
and (vii) the furnishing to the Underwriter of copies of all reports and
information required by Section 6(h) above, including costs of shipping and
mailing; PROVIDED, however, that except in the circumstances described in the
following paragraph, the aggregate amount of costs and expenses of the
Underwriter reimbursed hereunder shall not exceed two percent (2%) of the
proposed maximum aggregate offering price set forth on the facing page of the
Registration Statement.
(b) If the sale to the Underwriter of the Firm Shares on the First
Closing Date is not consummated because (i) this Agreement is terminated by
the Underwriter in accordance with the provisions of Section 11(i) hereof,
(ii) any condition of the Underwriter's obligations hereunder is not
satisfied, or (iii) of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision
hereof (unless such failure to satisfy such condition or to comply with any
provision hereof is due to the default or omission of the Underwriter), the
Company agrees to reimburse you upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
reasonably incurred by you and them in connection with the proposed purchase
and the sale of the Shares.
(c) The provisions of this Section 7 shall not affect any agreement
between the Company and the Selling Shareholder regarding the allocation or
sharing of the expenses and costs of the public offering and sale of the
Shares. Moreover, the execution, delivery and performance of this Agreement by
the Liquidator (as that term is defined in the Prospectus) is without prejudice
to any claim the Liquidator has or may have against Surety Bank or the Company.
-18-
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter to purchase and pay for the Firm Shares on the
First Closing Date and the Additional Shares on the Second Closing Date shall
be subject to the accuracy in all material respects of the representations
and warranties on the part of the Company and the Selling Shareholder herein
set forth as of the date hereof and as of the First Closing Date and the
Second Closing Date, as the case may be, to the accuracy of the statements of
the Company and the Selling Shareholder made pursuant to the provisions
hereof, to the performance in all material respects by the Company and the
Selling Shareholder of their respective obligations hereunder, and to the
following additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 5:00 P.M., Eastern
Time, on the first full business day after the date of this Agreement, or
such later time as shall have been consented to by you but in no event later
than 5:00 P.M., Eastern Time, on the third full business day following the
date hereof; and prior to the First Closing Date or the Second Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge
of the Company or you, shall be contemplated by the Commission. If the
Company has elected to rely upon Rule 430A, the information concerning the
initial public offering price of the Securities and price-related information
shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed period and the Company will provide evidence
satisfactory to the Underwriter of such timely filing (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rules 430A and 424(b)).
(b) The Shares shall have been qualified for sale under the blue
sky laws of such states as shall have been specified by you.
(c) The legality and sufficiency of the authorization, issuance
and sale of the Shares hereunder, the validity and form of the certificates
representing the Shares, the execution and delivery of this Agreement, the
Pricing Agreement, and all corporate proceedings and other legal matters
incident thereto, and the form of the Registration Statement and the
Prospectus (except financial statements) shall have been approved by your
counsel.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting the business
or properties of the Company and its subsidiaries, or First Midlothian and
its subsidiary, in each case taken as a whole, whether or not arising in the
ordinary course of business, which, in your reasonable judgment, makes it
impractical to proceed with the
-19-
public offering or delivery of the Shares as contemplated hereby or to
attempt to enforce contracts for the purchase of the Shares.
(e) There shall have been furnished to you on the First Closing
Date or the Second Closing Date, as the case may be:
(i) An opinion of Xxxxxx & Xxxxxx, L.L.P., Dallas, Texas,
counsel for the Company, addressed to you and dated the First Closing Date
or the Second Closing Date, as the case may be, to the effect that:
(1) Each of the Company and First Midlothian is validly
existing as a corporation in good standing under the laws of the State
of Delaware and the State of Texas, as the case may be, with full
corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus; each of the
Company and First Midlothian is a bank holding company duly registered
with the Federal Reserve Board; and each of the Company and First
Midlothian has been duly qualified to do business as a foreign
corporation under the corporation law of, and is in good standing as
such in, every jurisdiction where the ownership or leasing of
property, or the conduct of its business, requires such qualification
except where the failure so to qualify would not have a Material
Adverse Effect.
(2) Each Bank is a national bank duly chartered and
organized by authority of the OCC, validly existing and in good
standing under the laws of the United States of America. Each
subsidiary of the Company or First Midlothian is validly existing as a
corporation in good standing under the laws of its state of
incorporation with full corporate power and authority to own or lease
its properties and conduct its business as described in the
Prospectus; and each subsidiary of its Company or First Midlothian has
been duly qualified to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, every
jurisdiction where the ownership or leasing of property, or the
conduct of its business, requires such qualification except where the
failure so to qualify would not have a Material Adverse Effect.
(3) The Company has an authorized capitalization as set
forth in the Prospectus and the Shares conform, in all material
respects, to the description thereof contained in the Prospectus.
(4) No consent, approval, authorization or other order of
or filing with, any court, regulatory body, administrative agency or
other
-20-
governmental body is legally required for the execution, delivery and
performance of this Agreement by the Company, except as may be
required under or by the 1933 Act, the Amex or the blue sky laws of
the various jurisdictions.
(5) Each of this Agreement and the Pricing Agreement have
been duly and validly authorized and executed by the Company and
constitutes a valid and binding obligation of the Company except only
insofar as (i) such agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other laws relating to
creditors' rights generally, (ii) the remedy of specific performance
and injunctive and other equitable relief may be subject to equitable
defenses, and (iii) such enforcement may be subject to any limitations
under applicable federal securities laws relating to indemnification
and contribution.
(6) The Registration Statement has become effective under
the 1933 Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated by the Commission under the 1933 Act,
and the Registration Statement (including the information deemed to be
part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), the Prospectus and each
amendment or supplement thereto (except for the financial statements
and other statistical or financial data included therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act; and the
Primary Shares to be issued to the Underwriter have been approved for
listing on the Amex upon official notice of issuance.
(7) There are no contracts or documents required to be
described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are not described or
filed, as required, and such contracts and documents as are summarized
in the Registration Statement or Prospectus are fairly summarized in
all material respects; and there are no statutes or regulations or any
legal or governmental proceedings pending or, to the knowledge of such
counsel, threatened, required to be described in the Prospectus which
are not described as required.
(8) All of the issued and outstanding shares of the
Company's capital stock have been duly authorized, validly issued and
are
-21-
fully paid and non-assessable and free of preemptive or other
similar rights under the General Corporation Law of the State of
Delaware, and to such counsel's knowledge there are no options,
agreements, contracts or other rights in existence to acquire from
the Company any shares of Common Stock, except as set forth in the
Prospectus. Except as set forth in the Prospectus, to such counsel's
knowledge there are no holders of the securities of the Company
having rights to the registration thereof. The Company has no
subsidiary which conducts business as a bank under the laws of the
State of Texas or Federal law, other than Surety Bank. All of the
capital stock of each subsidiary of the Company, other than
Surety Bank, has been duly authorized, validly issued and is fully
paid and non-assessable. All of the outstanding capital stock of each
of the Banks has been duly authorized and validly issued and is fully
paid and, subject to 12 U.S.C. Section 55 (1982), nonassessable.
The Company, directly or indirectly, owns of record, free and clear
of any liens, claims, encumbrances or rights of others, all of the
issued and outstanding shares of each of its subsidiaries, except as
described in the Prospectus. To such counsel's knowledge, there are
no options, agreements, contracts or other rights in existence to
purchase or acquire from the Company or its subsidiaries any issued
and outstanding shares of such subsidiaries.
(9) The Primary Shares to be sold by the Company pursuant
to this Agreement and the Pricing Agreement have been duly authorized
and, when issued and paid for in accordance with this Agreement and
the Pricing Agreement, will be validly issued, fully paid and non-
assessable; the holders of the Shares will not be subject to personal
liability under the General Corporation Law of the State of Delaware
by reason of being such holders; the Shares are not subject under
the General Corporation Law of the State of Delaware to the preemptive
rights of any shareholder of the Company.
(10) This Agreement and the Pricing Agreement have been duly
and validly authorized, executed and delivered by the Company.
(11) The statements in the Prospectus under the captions
"Regulation and Supervision" and "Description of Securities," insofar
as they constitute conclusions of law, are correct in all material
respects.
(12) The execution, delivery and performance by the Company
of this Agreement and the Pricing Agreement have been duly authorized
by all necessary corporate action and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or
bylaws (as amended) and do not and will not result in the breach of,
or
-22-
violate, any of the terms or provisions of or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
subsidiaries under any material agreement, franchise, license,
indenture, lease, mortgage, deed of trust, or other instrument known
to such counsel to which the Company or any subsidiary is a party or
by which the Company, any subsidiary or the property of any of them
may be bound or affected, or, to such counsel's knowledge, any law,
order, judgment, decree, rule or regulation applicable to the Company
or any subsidiary of any government, governmental instrumentality,
court or regulatory body, administrative agency or other governmental
body having jurisdiction over the Company or any subsidiary or any of
their respective properties, or any order of any court or governmental
agency or other regulatory authority entered in any proceeding to
which the Company or any subsidiary was or is now a party or by which
it is bound.
(13) There is no material legal proceeding pending or, to
such counsel's knowledge, threatened against the Company except as
disclosed in the Prospectus.
(14) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(15) That certain Reorganization Agreement dated October 17,
1995 among First Midlothian, Midlothian Bank, the directors of
Midlothian in their individual and representative capacities and the
Company and the transactions contemplated thereby has been authorized
by all necessary corporate action on the part of the Company, has been
executed and delivered by the Company and the other parties thereto
and constitutes a valid and binding obligation of the Company
(assuming the due authorization, execution and delivery thereof by the
other parties thereto) enforceable against the Company in accordance
with its terms, except insofar as (i) such agreement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding thereafter may be brought.
-23-
In rendering such opinion, such counsel may rely, provided
that the opinion shall state that you and they are entitled to so
rely, as to factual matters on certificates of the officers and
employees of, and accountants for, the Company, and as to certain
legal matters, the opinnion of Xxxxx & Xxxxxxx. Such opinion may
contain such other qualifications and assumptions as are reasonably
acceptable to counsel for the Underwriter.
In addition, counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
and representatives of the Underwriter and its counsel, at which the
contents of the Registration Statement, the Prospectus and related
matters were discussed and, although such counsel is not passing upon,
and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement
or the Prospectus and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to
factual matters upon the statements of officers and other
representatives of the Company), no facts have come to such counsel's
attention that have led them to believe that the Registration
Statement (other than financial statements, the notes thereto and
related schedules and other financial, statistical and accounting data
included therein or omitted therefrom, as to which such counsel need
express no belief), as amended or supplemented, if applicable, at the
time such Registration Statement or any post-effective amendment
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under the 1933
Act), or that the Prospectus (other than financial statements, the
notes thereto and related schedules and other financial, statistical
and accounting data included therein or omitted therefrom, as to which
such counsel need express no view) as amended or supplemented, if
applicable, as of its date and the First Closing Date or the Second
Closing Date, as applicable, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein not misleading in light of the circumstances
under which they were made.
(ii) Xxxxx, Tarrant & Xxxxx, Nashville, Tennessee, counsel to the
Selling Shareholder, shall have furnished to you their written opinion,
dated the First Closing Date to the effect that:
-24-
(1) The Selling Shareholder has been duly appointed
pursuant to Tenn. Code Xxx, SECTION 56-9-402 as Liquidator for
Anchorage. The Selling Shareholder has been duly authorized to take
possesion of and to liquidate the assets of Anchorage and to wind
up its affairs. To our knowledge after due inquiry, the Selling
Shareholder has valid and unencumbered title to, and all requisite
authority and power to sell, assign, transfer and deliver the Shares
in accordance with the terms and conditions of the Tranaction
Documents. Upon delivery of such Shares and payment therefor,
assuming the Underwriter is a "bona fide purchaser" within the
meaning of the Uniform Commercial Code, the Underwriter will acquire
valid and unencumbered title to the Shares.
(2) No consent, approval, authorization, order or other
action by, or filing with, any court or other governmental
authority of the United States or Tennessee is required of the
Selling Shareholder for the execution and delivery of and
performance by the Selling Shareholder,of its obligations under the
Transaction Documents except for the Court orders which have
already been obtained and filings made and approvals required
pursuant to the Securities Act of 1933, as amended and such filings
and approvals as may be required under state securities laws.
(3) The execution, delivery and performance of the
Agreement, and the consummation of the transactions therein
contemplated, will not result in a breach or violation of any (i)
statute, rule, regulation, or order of any court or other governmental
authority of the United States or Tennessee applicable to or having
jurisdiction over the Selling Shareholder, or (ii) to our knowledge
after due inquiry, any material written agreement or instrument to
which the Selling Shareholder is a party or by which the Selling
Shareholder is bound or to which the Shares are subject, which
breach, violation or default would encumber the Shares or render the
transaction contemplated by the Transaction Documents void.
(4) The Agreement has been duly authorized, executed and
delivered by the Selling Shareholder and constitutes a legal, valid
and binding obligation of the Selling Shareholder enforceable against
the Selling Shareholder in accordance with its terms, except insofar
as (i) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and the
discretion of the court before which any proceeding thereafter may be
brought, (ii) such enforcement may be subject to any limitations
under applicable federal securities laws relating to indemnification
and contribution and (iii) any liability for indemnification and
contribution cannot exceed the assets of Anchorage in possession of
the Selling Shareholder.
(5) The Custody Agreement has been duly executed and
delivered by the Selling Shareholder and constitutes a legal, valid
and binding obligation of the Selling Shareholder enforceable against
the Selling Shareholder in accordance with its terms except insofar as
the remedy of specific performance and injunctive and other forms of
equitable relief may
-25-
be subject to equitable defenses and to the discretion of the court
before which any proceedings thereafter may be brought.
(6) In our capacity as counsel to the Selling
Shareholder, we have reviewed the registration statement on Form S-1
(Registration No. 33-64789) filed by the Company with the Securities
and Exchange Commission ("Registration Statement"). Although we are
not passing upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, except as otherwise indicated herein, we
advise you that no facts have come to our attention which lead us
to believe that the information included under the caption "Selling
Shareholder" in the Registration Statement and the prospectus
contained therein, as of the date the Registration Statement was
declared effective, contained any untrue statement of material fact
or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that
the information included under the caption "Selling Shareholder" in
the prospectus as of the date hereof contains an untrue statement
of material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
In rendering such opinion, such counsel may rely,
provided that the opinion shall state that you and they are entitled
to so rely, as to factual matters on certificates of the officers and
employees of, the Selling Shareholder. Such opinion may contain such
other qualifications and assumptions as are reasonably acceptable to
counsel for the Underwriter.
(iii) Such opinion or opinions of Xxxxxxxxx & Xxxxxxxxx,
L.L.P., counsel for the Underwriter, dated the First Closing Date or the
Second Closing Date, as the case may be, to such matters as you may
reasonably require.
(iv) A certificate of the Company executed by the chief executive
officer and the principal financial officer of the Company, dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct, in all
material respects, as of the date of this Agreement and as of the
First Closing Date or the Second Closing Date, as the case may be, and
the Company has complied, in all material respects, with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as part of the Registration Statement or any amendment thereto;
no stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best knowledge of the respective
signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subsection shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
paragraphs (1) and (2) of this subsection to be set forth in said
certificate.
(v) A certificate of the Selling Shareholder executed by the
Special Deputy Commissioner and Liquidator of the Company, dated the First
Closing Date, to the effect that the representations and warranties of the
Selling
-26-
Shareholder set forth in Section 3 of this Agreement are true and correct,
in all material respects, as of the date of this Agreement and as of the
First Closing Date, and the Selling Shareholder has complied, in all
material respects, with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the First Closing
Date. The delivery of the certificate provided for in this subsection
shall be and constitute a representation and warranty of the Selling
Shareholder as to the facts required in this subsection to be set forth in
said certificate.
(vi) At the time the Pricing Agreement is executed and also on
the First Closing Date and the Second Closing Date, as the case may be,
there shall be delivered to you letters addressed to you and the Board
of Directors of the Company from Coopers & Xxxxxxx LLP, and Samson,
Xxxxxxx & Associates, P.L.L.C., independent accountants, the first one to
be dated the date of the Pricing Agreement, the second one to be dated the
First Closing Date and the third one (in the event of a second closing)
to be dated the Second Closing Date, to the effect set forth in Exhibit B.
(vii) All conditions to the consummation of the transactions
among the Company, First Midlothian, Midlothian Bank and the directors of
Midlothian Bank described in the Prospectus under the caption "The
Midlothian Bank Acquisition" shall have been satisfied in a manner
satisfactory to the Underwriter in its reasonable discretion,
(viii) The Underwriter shall have received a Lock-Up Letter
from each executive officer and director of the Company.
(ix) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel for the Underwriter. The Company and
the Selling Shareholder shall furnish you with such manually signed or conformed
copies of such opinions, certificates, letters and documents as you reasonably
request.
If any condition to the Underwriter's obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and the Selling
Shareholder without liability on the part of the Underwriter, the Company or the
Selling Shareholder, except for the expenses to be
-27-
paid or reimbursed by the Company and the Selling Shareholder pursuant to
Sections 7 hereof and except to the extent provided in Section 9 hereof.
SECTION 9. INDEMNIFICATION. (a) The Company agrees to indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of the 1933 Act or the Exchange Act, from and
against any and all losses, claims, damages, liabilities and expenses
whatsoever (including but not limited to reasonable attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, any
and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the 1933 Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any untrue statement
of a material fact contained in any preliminary prospectus or the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties
of the Company contained herein or any failure of the Company to perform its
respective obligations hereunder or under law, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or allegation thereof which has been made
therein or omitted therefrom in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Underwriter expressly for use therein; provided, however, that the
indemnification contained in this paragraph with respect to any preliminary
prospectus shall not inure to the benefit of the Underwriter (or of any
person controlling the Underwriter) with respect to any action or claim
arising from the sale of the Shares by the Underwriter brought by any person
who purchased Shares from the Underwriter to the extent it is determined by a
court of competent jurisdiction in a final non-appealable decision that (i) a
copy of the Prospectus (as amended or supplemented if any amendment or
supplements thereto shall have been furnished to the Underwriter prior to the
written confirmation of the sale involved) shall not have been given or sent
to such person by or on behalf of the Underwriter with or prior to the
written confirmation of the sale involved and (ii) the untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the Prospectus (as amended or supplemented if amended or
supplemented as aforesaid). In addition to its other obligations under this
Section 9(a), the Company agrees that, as an interim measure during the
pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 9(a), it will
promptly reimburse the Underwriter and the Selling Shareholder for all
reasonable legal expenses as they are
-28-
incurred in connection with investigating or defending such claim, action,
investigation, inquiry or other proceeding. To the extent that any such
interim reimbursement payment is held by a court of competent jurisdiction to
have been improper, each recipient thereof will promptly return it to the
Company.
(b) The Company agrees to indemnify and hold harmless the Selling
Shareholder and each person, if any, who controls the Selling Shareholder
within the meaning of the 1933 Act or the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses whatsoever
(including but not limited to reasonable attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the 1993 Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon any untrue statement of a material
fact contained in any preliminary prospectus or the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a mateial
fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of or are based in whole or in part on
any failure of the Company to perform its respective obligations hereunder or
under the 1933 Act or the Exchange Act, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or allegation thereof which has been made
therein or omitted therefrom in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Selling Shareholder expressly for use therein; provided, however, that the
Company shall have no obligation to indemnify or hold harmless the Selling
Shareholder with respect to any action or claim arising out of or based in
whole or in part upon, or related to, any alleged disclosure or omission or
inaccuracy or failure regarding TENNESSEE EX REL XXXXXXX XXXXXXXX,
COMMISSIONER OF COMMERCE AND INSURANCE FOR THE STATE OF TENNESSEE, ET AL. VS.
SURETY BANK, N.A., OR UNITED SHORTLINE INC. ASSURANCE SERVICES, N.A., ET AL.
VS. MACGREGOR GENERAL INSURANCE COMPANY, LTD., ET AL. or any related
proceedings.
(c) The Selling Shareholder agrees to indemnify and hold harmless the
Company, each of its officers and directors who sign the Registration Statement
and each person, if any, controlling the Company within the meaning of the 1933
Act or the Exchange Act, and to indemnify and hold harmless the Underwriter and
each person, if any, controlling the Underwriter within the meaning of the 1933
Act or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to the Underwriter and the Selling Shareholder, but only with respect to
information relating to the Selling Shareholder furnished in writing to the
Company or the Underwriter by or on behalf of the Selling Shareholder expressly
for use in the Registration Statement, the Prospectus, any preliminary
prospectus, or any amendment thereof or supplement thereto.
(d) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of the 1933 Act and the
Exchange Act, and to indemnify and hold harmless the Selling Shareholder and
each person, if any, controlling the Selling Shareholder within the meaning of
the 1933 Act and the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the Underwriter and the Selling Shareholder, but only with
respect to information relating to the Underwriter furnished in writing to the
Company by or on behalf of the Underwriter expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment
thereof or supplement thereto.
(e) If any action or claim shall be brought against any indemnified
party under this Section 9, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 9,
promptly notify the indemnifying party in writing of the commencement thereof.
No indemnification shall be available to any party who shall fail to give notice
as provided in this Section 9(e) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but otherwise the omission so to
notify the indemnifying party will not relieve it from any liability that it may
have to an indemnified party under this Section 9. In case any such action is
brought against an indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. Upon receipt of notice from the
indemnifying party to such
-29-
indemnified party of its election to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnifying party has agreed in writing
to pay such fees and expenses, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action or (iii) the named parties to any such action (including any
impleaded party) include such indemnified party and the indemnifying party
and such indemnified party shall have been advised in writing by counsel
having experience in securities litigation that there may be one or more
legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case if such indemnified
party notifies the indemnifying party, the indemnifying party shall, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of not more than one separate firm of attorneys for all such indemnified
parties) and which, in the opinion of such counsel, would make it impractical
to have common representation. The indemnifying party shall not be liable
for any settlement of any such action effected without its written consent,
but if settled with its written consent, or if there shall be a final
judgment for the plaintiff in any such action and the time for filing all
appeals has expired, the indemnifying party agrees to indemnify and hold
harmless any indemnified party and any such controlling person from and
against any loss or liability by reason of such settlement or judgment.
(f) (i) If the indemnification provided for in this Section 9 is
unavailable as a matter of law to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (A) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Shareholder and the Underwriter from the offering of the
Shares or (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (A) above but also the relative fault of
the Company, the Selling Shareholder and of the Underwriter in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company, the Selling
Shareholder and the Underwriter shall be deemed to be in the same proportion,
in the case of the Company and the Selling Shareholder, as the total price paid
to the Company or the Selling Shareholder, as the case may be, for the Shares by
the Underwriter (net of underwriting discounts and commissions but before
deducting expenses), and, in the case of the Underwriter, as the underwriting
commissions received by it, bears to the total of such
-30-
amounts paid to the Company and received by the Underwriter as underwriting
commissions in each case as contemplated by the Prospectus. The relative
fault of the Company, the Selling Shareholder and of the Underwriter 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 the Company, the
Selling Shareholder or by the Underwriter and the party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omissions.
(ii) The Company, the Selling Shareholder and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 9(f) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in subsection (f)(i). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred to in
subsection (f)(i) shall be deemed to include, subject to the limitations set
forth in this Section 9(f), 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 9(f), the
Underwriter shall not be required to contribute any amount in excess of the
amount of the total underwriting commissions received by the Underwriter in
connection with the Shares underwritten by it and distributed to the public. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(g) The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter, the Selling Shareholder, the Company or its
directors or officers (or any person controlling any such person), (ii)
acceptance of any Shares and payment therefor or hereunder and (iii) any
termination of this Agreement. A successor or assign of the Underwriter, the
Selling Shareholder, the Company or its directors or officers and their legal
and personal representatives (or of any person controlling an Underwriter or the
Company) shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
SECTION 10. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 7, 9 and 11 and as to all other provisions upon
execution and delivery of the Pricing Agreement.
SECTION 11. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may also be
terminated by you in
-31-
your absolute discretion, without liability on your part to the Company or to
the Selling Shareholder, by notice given to the Company and the Selling
Shareholder, if prior to the First Closing Date or, with respect to the
Additional Shares, on or prior to any later date on which the Additional
Shares are to be purchased, as the case may be, (i) there has been, since the
date of this Agreement or since the respective dates as of which information
is given in the Prospectus any material adverse change in the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries, or First Midlothian and its
subsidiaries, considered as a whole, whether or not arising in the ordinary
course of business; or (ii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers Automated Quotation System shall have been suspended, or
if there is a significant decline in the value of securities generally on
such exchanges or such market, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities generally shall
have been required on either of such exchanges or on such market, by the
exchanges, market or by order of the Commission or any other governmental
authority having jurisdiction; or (iii) a general moratorium on savings bank,
savings and loan association or commercial banking activities in the United
States or in New York or Texas shall have been declared by either Federal or
state authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or change in political, financial or economic conditions the effect of which
on the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to market the Shares or to enforce
contracts for the purchase of Shares. Notice of such cancellation shall be
given to the Company and the Selling Shareholder by telegraph, telephone or
facsimile but shall be subsequently confirmed by letter.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, the Selling Shareholder and the Underwriter set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any termination of this Agreement or investigation made by or on
behalf of the Underwriter, the Selling Shareholder or the Company or any of its
or their partners, officers or directors or any controlling person, and will
survive delivery of and payment for the Shares sold hereunder.
SECTION 13. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriter will be mailed, delivered or telegraphed and
confirmed to Xxxxxx & Xxxxxx Incorporated, 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with a copy to Xxxxxxxxx & Xxxxxxxxx, L.L.P.,
000 Xxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxx X.
Xxxxxxxx; if sent to the Company will be mailed, delivered or telegraphed and
confirmed to the Company at its corporate headquarters with a copy to Xxxxxx &
Xxxxxx, L.L.P., 00000 Xxxx Xxxx, XX 00, Xxxxxx, Xxxxx 00000-0000, Attention:
Xxx Xxxxxx; if sent to the Selling Shareholder will be mailed, delivered or
telegraphed and
-32-
confirmed to the Selling Shareholder c/o Tennessee Receiver's Office, 7000
Executive Center Drive, Xxx Xxxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx
00000, with a copy to Xxxxx, Tarrant & Xxxxx, 0000 Xxxxxxxxx Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx.
SECTION 14. SUCCESSORS. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representative and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 9,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from the
Underwriter merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 16. APPLICABLE LAW. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
California.
-33-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholder and the
Underwriter, all in accordance with its terms.
Very truly yours,
SURETY CAPITAL CORPORATION
By:_______________________________
X.X. Xxxxxx
Vice President and Chief Financial Officer
ANCHORAGE FIRE AND CASUALTY
INSURANCE COMPANY, IN LIQUIDATION
By:_______________________________
Xxxxxx Xxxxxx Xxxxxx,
Special Deputy Commissioner
Tennessee Department of Commerce and
Insurance, as Liquidator
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
XXXXXX & XXXXXX INCORPORATED
By:_______________________________
Xxxx X. Xxxxxxx
Partner
-34-
EXHIBIT A
SURETY CAPITAL CORPORATION
2,100,000 Shares Common Stock*
PRICING AGREEMENT
February __, 1996
Xxxxxx & Xxxxxx Incorporated
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated February 21, 1996
(the "UNDERWRITING AGREEMENT") relating to the sale by the Company and the
Selling Shareholder and the purchase by Xxxxxx & Xxxxxx Incorporated (the
"UNDERWRITER"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise
defined herein.
Pursuant to Section 4 of the Underwriting Agreement, the Company agrees
with the Underwriter as follows:
1. The initial public offering price per share for the Shares shall be
$_____.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $_____ being an amount equal to the initial public
offering price set forth above less $___ per share.
_____________
* Plus an option to acquire up to 288,759 additional shares to cover
overallotments.
A-1
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Shareholder and the Underwriter, all in accordance with its terms.
Very truly yours,
SURETY CAPITAL CORPORATION
By:
-----------------------------------
X.X. Xxxxxx
Vice President and Chief
Financial Officer
ANCHORAGE FIRE AND CASUALTY
INSURANCE COMPANY, IN LIQUIDATION
--------------------------------------
By: Xxxxxx Xxxxxx Xxxxxx,
Special Deputy Commissioner,
Tennessee Department of Commerce
& Insurance, as Liquidator
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
XXXXXX & XXXXXX INCORPORATED
By:
----------------------------------
Xxxx X. Xxxxxxx
Partner
A-2
EXHIBIT B
Comfort Letter of Coopers & Xxxxxxx LLP
(1) They are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and any
supplementary financial information and schedules (and all pro forma
financial information) of the Company and its subsidiaries included in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries
of certain officers of the Company and its subsidiaries responsible for
financial and accounting matters as to transactions and events subsequent to
December 31, 1994, a reading of minutes of meetings of the shareholders and
directors of the Company and its subsidiaries since December 31, 1994, a
reading of the latest available interim unaudited consolidated financial
statements of the Company and its subsidiaries (with an indication of the
date thereof) and other procedures as specified in such letter, nothing came
to their attention which caused them to believe that (i) the unaudited
consolidated financial statements of the Company and its subsidiaries
included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
or that such unaudited financial statements are not fairly presented in
accordance with generally accepted accounting principles, and (ii) at a
specified date not more than five days prior to the date thereof in the case
of the first letter and not more than two business days prior to the date
thereof in the case of the second and third letters, there was any change in
the capital stock or long-term debt or short-term debt (other than normal
payments) of the Company and its subsidiaries on a consolidated basis or any
decrease in consolidated shareholders' equity as compared with amounts shown
on the latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance sheet
to a date not more than five days prior to the date thereof in the case of
the first letter and not more than two business days prior to the date
thereof in the case of the second and third letters, there were any
decreases, as compared with the corresponding period of the prior year, in
consolidated net interest income, consolidated noninterest income or in the
total or per share amounts of net earnings, except, in all instances, for
changes or decreases which the Prospectus discloses have occurred or may
occur or which are set forth in such letter.
(4) They have carried out specified procedures, which have been agreed
to by the Underwriters, with respect to certain information in the Prospectus
specified by the Underwriters, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records
of the Company and its subsidiaries.
B-1
