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WARRANT AGREEMENT
June ----, 1998
TEJAS SECURITIES GROUP, INC.
As the Representative of the Several Underwriters
c/o Tejas Securities Group, Inc.
1250 Capital of Xxxxx Xxx., Xxxxx Xxxxxxxx Xxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
Lincoln Heritage Corporation, a Texas corporation (the "Company"),
hereby agrees to sell to you, and you hereby agree to purchase from the
Company at an aggregate purchase price of $100, stock purchase warrants (the
"Underwriter Warrants") covering $100,000 shares of common stock, $0.01 par
value, of the Company (the "Common Stock"). The Underwriter Warrants will be
exercisable by you as to all or any lesser number of shares of Common Stock
covered thereby, at the Purchase Price per share as defined below, at any
time and from time to time on and after the first anniversary of the date
hereof and ending at 5:00 p.m. on the fifth anniversary of the date hereof.
1. Definitions
As used herein, the following terms, unless the context otherwise
requires, shall have for all purposes hereof the following meanings:
The term "Act" refers to the Securities Act of 1993, as amended.
The term "Affiliate" of any Person refers to any Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with, such other Person. A Person shall be deemed to control a
Person if such Person possesses, directly or indirectly , the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
The term "Commission" refers to the Securities and Exchange Commission.
The term "Common Stock" refers to all stock of any class or classes
(however designated) of the Company, now or hereafter authorized, the holders
of which shall have the right without limitation as to amount, either to all
or to a part of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference, and the holders of which shall ordinarily, in the absence of
contingency, be entitled to vote for the election of a majority of the
directors of the Company (even though the right so to vote has been suspended
by the occurrence of such a contingency).
The term "Current Market Price" on any date refers to the average of
the daily Market Price per share for the 30 consecutive Trading Days
commencing 45 Trading Days before the date in question.
The term "Exchange Act" refer to the Securities Exchange Act of 1934,
as amended.
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The term "Market Price" refers to the closing sale price on the
American Stock Exchange ("AMEX") or, if no closing sale price is reported,
the closing bid price of the Common Stock, as quoted by AMEX or Nasdaq, as
applicable, or, if the Common Stock is not quoted by Nasdaq, as reported by
the National Quotation Bureau Incorporated. If Market Price cannot be
established as described above, market price shall be the fair market value
of the Common Stock as determined in good faith by the Board of Directors of
the Company, whose determination shall be conclusive.
The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Underwriter Warrants at any time shall be
entitled to receive, or shall have received, upon the exercise of the
Underwriter Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 6 below
or otherwise.
The term "Person" refers to an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization and a
government or any department or agency thereof.
The term "Purchase Price" refers to the purchase price, per share, of
the shares of Common Stock subject to this Agreement. The Purchase Price
shall equal -----------, subject to adjustment as provided in Section 6
below.
The term "Registration Statement" refers to a Registration Statement
filed with the Commission pursuant to the rules and regulations of the
Commission promulgated under the Act.
The term "Trading Day" shall mean a day on which the AMEX or the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business.
The term "Underlying Stock" refers to the shares of Common Stock (or
Other Securities) issuable under this Warrant Agreement pursuant to the
exercise, in whole or in part, of the Underwriter Warrants.
The purchase and sale of the Underwriter Warrants shall take place, and
the purchase price therefore shall be paid by delivery of your check,
simultaneously with the purchase of and payment for any shares of Common
Stock as provided in that certain Underwriting Agreement dated June ----,
1998, relating to the public offering of shares of the Common Stock pursuant
to a Registration Statement.
2. Representations and Warranties.
The Company represents and warrants to you as follows:
(a) Corporate Action. The Company has all requisite corporate power
and authority, and has taken all necessary corporate action, to execute and
deliver this Agreement, to issue and deliver the Underwriter Warrants and
certificates evidencing same, and to authorize and reserve for issuance, and
upon payment from time to time of the Purchase Price to issue and delivery,
the Shares.
(b) No Violation. Neither the execution nor delivery the execution
nor delivery of this Agreement, the consummation of the actions herein
contemplated nor compliance with the terms and provisions hereof will
conflict with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any of the terms, provisions or conditions of
the Articles of Incorporation, as amended, or Bylaws of the Company or any
indenture, mortgage, deed of trust note, bank loan, credit agreement
franchise, license, lease, permit, judgment decree, order, statute, rule or
regulation or any other agreement, understanding or instrument to which the
Company is a party or by which it is bound.
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3. Compliance with the Act.
(a) Transferability of Underwriter Warrants. You agree that the
Underwriter Warrants may not be transferred, sold, assigned or hypothecated
for a period of one (1) year from the date hereof, except to: (i) persons
who are officers of you; (ii) a successor to you in a merger or
consolidation; (iii) a purchaser of all or substantially all of your assets;
(iv) your shareholders in the event you are liquidated or dissolved, and (v)
persons who are officers of participating broker-dealers.
(b) Registration of Underlying Stock. The Underlying Stock issuable
upon the exercise of the Underwriter Warrants have not been registered under
the Act. You agree not to make any sale or other disposition of the
Underlying Stock except pursuant to a Registration Statement which has become
effective under the Act, setting forth the terms of such offering, the
underwriting discount and the commissions and any other pertinent data with
respect thereto, unless you have provided the Company with an opinion of
counsel reasonably acceptable to the Company that such registration is not
required.
(c) Demand Registration. At any time and from time to time after the
first anniversary of the effective date hereof but prior to the fifth
anniversary of the effective date hereof, the holders of Underwriter Warrants
shall have the right to make written request of the Company on one occasion
to register under the Act at least fifty percent (50%) of the Underlying
Stock which would be issuable upon exercise of the Underwriter Warrants
pursuant to the terms and conditions hereof. The Underlying Stock specified
in such request or a request pursuant to Section 3(d) hereof is referred to
herein as the "Subject Stock." Promptly upon receipt of such request, the
Company shall file with the Commission a Registration Statement on the
applicable form for the registration of the Subject Stock and use its best
efforts to cause such Registration Statement to become effective (including,
without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with the Act and the Rules and Regulations promulgated
thereunder) as soon as practicable to permit or facilitate the sale and
distribution of the Subject Stock. Immediately upon receipt of a request for
registration pursuant to this Section 3(c), the Company shall notify each of
the holders of Underwriter Warrants of such request.
Notwithstanding the provisions of this Section 3(c), if the Company
shall furnish to the holders of Underwriter Warrants a certificate signed by
the Chief Executive Officer of the Company stating that in the good faith
judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such a Registration
Statement to be filed and it is therefore essential to defer a filing of such
Registration Statement, the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days after receipt of
the request from the holders of Underwriter Warrants to effect such a
registration; provided, however, that the Company may not utilize the right
more than once in any twenty-four (24) month period; and, provided further,
that the holders of Underwriter Warrants may, at any time in writing,
withdraw such request for such registration and preserve the right provided
in this Section 3(c) for the holders of Underwriter Warrants to request such
registration.
(d) Inclusion in Registration of Other Securities. If at any time
after the effective date hereof but prior to the fifth anniversary of the
effective date hereof, the Company shall propose the registration on a form
under the Act of any shares of Common Stock or Other Securities (which form
is appropriate for inclusion therein of the underlying Common Stock), the
Company shall at least 30 days prior to the filing of such Registration
Statement give holders of Underwriter Warrants written notice, or telegraphic
or telephonic notice followed as soon as practicable by written
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confirmation thereof, of such proposed registration and, upon written notice,
or telegraphic or telephonic notice followed as soon as practicable by written
confirmation thereof, given to the Company within five business days after
the giving of such notice by the Company, shall include or cause to be
included in any such Registration Statement all or such portion of the
Underlying Stock as such holders may request, provided, however, that the
Company may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with
the registration of such Common Stock or other Securities originally proposed
to be registered.
Notwithstanding any provision of this Agreement to the contrary, if any
holder of Underwriter Warrants exercises such Underwriter Warrants but shall
not have included all the Underlying Stock in a Registration Statement which
complies with Section 10(a)(3) of the Act, which has been effective for at
least 30 calendar days following the exercise of the Underwriter Warrants,
the registration rights set forth in this Section 3(d) shall be extended
until such time as (i) such a Registration Statement including such
Underlying Stock has been effective for at least 30 calendar days or (ii) in
the opinion of counsel satisfactory to you and the Company, registration is
not required under the Act or under applicable state laws for resale of the
Underlying Stock in the manner proposed.
(e) Company's Obligations in Registration. In connection with any
offering of Subject Stock pursuant to Section 3(c) or 3(d) above, the Company
shall:
(i) Notify you as to the filing thereof and of all amendments
or supplements thereto filed prior to the effective date
thereof,
(ii) Comply with all applicable rules and regulations of the
Commission;
(iii) Notify you immediately, and confirm the notice in
writing, (1) when the Registration Statement becomes
effective, (2) of the issuance by the Commission of any
stop order or of the initiation, or the threatening, of
any proceedings for that purpose, (3) of the receipt by
the Company of any notification with respect to the
suspension of qualification of the Subject Stock for
sale in any jurisdiction or of the initiation, or the
threatening, of any proceedings for that purpose and (4)
of the receipt of any comments, or requests for
additional information, from the Commission or any state
regulatory authority. If the Commission or any state
regulatory authority shall enter such a stop order or
order suspending qualification at any time, the Company
will make every reasonable effort to obtain the lifting
of such order as promptly as practicable.
(iv) During the time when a Prospectus is required to be
delivered under the Act during the period required for
the distribution of the Subject Stock, comply so far as
it is able with all requirements imposed upon it by the
Act as hereafter amended, and by the rules and
regulations promulgated thereunder, as from time to time
in force, so far as necessary to permit the continuance
of sales of or dealings in the Subject Stock. If at any
time when a Prospectus relating to the Subject Stock is
required to be delivered under the Act any event shall
have occurred as a result of which, in the opinion of
counsel for the Company or your counsel, the Prospectus
relating to the Subject Stock as then amended or
supplemented includes an untrue statement of a material
fact or omits 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 such Prospectus to comply with the Act
the Company will promptly prepare and file with the
Commission an appropriate amendment or supplement (in
form satisfactory to you).
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(v) Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes
effective, to qualify the Subject Stock for offering and
sale under the securities laws relating to the offering
or sale of the Subject Stock of such jurisdictions as
you I may reasonably designate and to continue the
qualifications in effect so long as required for purposes
of the sale of the Subject Stock; provided that no such
qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject
to service of general process, or to taxation as a
foreign corporation doing business in such jurisdiction.
In each jurisdiction where such qualification shall be
effected, the Company will, unless you agree that such
action is not at the time necessary or advisable, file
and make such statements or reports at such times as are
or may reasonably be required by the laws of such
jurisdiction. For the purposes of this paragraph, "good
faith" is defined as the same standard of care and
degree of effort as the Company will use to qualify its
securities other than the Subject Stock.
(vi) Make generally available to its security holders as soon
as practicable, but not later than the first day of the
eighteenth full calendar month following the effective
date of the Registration Statement, an earning statement
(which need not be certified by independent public or
independent certified public accountants unless required
by the Act or the rules and regulations promulgated
thereunder, but which shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 thereunder)
covering a period of at least twelve months beginning
after the effective date of the Registration Statement.
(vii) After the effective date of such Registration Statement,
prepare, and promptly notify you of the proposed filing
of, and promptly file with the Commission, each and every
amendment or supplement thereto or to any Prospectus
forming a part thereof as may be necessary to make any
statements therein not misleading; provided that no such
amendment or supplement shall be filed if you shall
object thereto in writing promptly after being furnished
a copy thereof.
(viii) Furnish to you, as soon as available, copies of any such
Registration Statement and each preliminary or final
Prospectus, or supplement or amendment prepared pursuant
thereto, all in such quantities as you may from time to
time reasonably request.
(ix) Make such representations and warranties to any
underwriter of the Subject Stock, and use your best
efforts to cause Company counsel to render such opinions
to such underwriter, as such underwriter may reasonably
request.
(x) Pay all costs and expenses incident to the performance
of the Company's obligations under Section 3(c) or 3(d)
above and under this Section 3(e), including without
limitation the fees and disbursements of the Company's
auditors and legal counsel, of one legal counsel for the
holders of Subject Stock and of legal counsel responsible
for qualifying the Subject Stock under blue sky laws, all
filing fees and printing expenses, all expenses in
connection with the transfer and delivery of the
Underlying Stock, and all expenses in connection with the
qualification of the Subject Stock under blue sky laws;
provided, however, that the Company shall not be
responsible for compensation and reimbursement of
expenses to underwriters or selling agents for the
included Subject Stock.
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(xi) Notwithstanding any other provisions of the Agreement,
(1) the Company may postpone for no more than 120 days in
any 360-day period, the filing or the effectiveness of a
registration statement pursuant to a demand registration
if the Board of Directors, acting in good faith, believes
that such demand registration might reasonably be
expected to have an adverse effect on any proposal or
plan to engage in any acquisition or disposal of stock or
assets or any merger, consolidation, tender offer or
similar transaction; provided that in such event, the
holders of the Subject Stock requesting such demand
registration will be entitled to withdraw such request
and, is such request is withdrawn, such demand
registration will not be counted as a demand
registration, and (2) the Company shall not be obligated
to effect any registration of the Subject Securities in
the event the holders of such securities are able to sell
or transfer such securities pursuant to the requirements
of Rule 144 under the Securities Act of 1933, as amended
(or any similar rule then in force), without limitation
as to the volume of such sales.
(f) Agreements by Warrant Holder. In connection with the filing of a
Registration Statement pursuant to Section 3(c) or 3(d) above, if you
participate in the offering of the Subject Stock by including shares owned by
you, you agree:
(i) To furnish the Company all material information requested
by the Company concerning yourself and your holdings of
securities of the Company and the proposed method of sale
or other disposition of the Subject Stock and such other
information and undertakings as shall be reasonably
required in connection with the preparation and filing of
any such Registration Statement covering all or a part of
the Subject Stock and in order to ensure fall compliance
with the Act, and
(ii) To cooperate in good faith with the Company and its
underwriters, if any, in connection with such
registration, including placing the shares of Subject
Stock to be included in such Registration Statement in
escrow or custody to facilitate the sale and
distribution thereof.
(g) Indemnification. The Company shall indemnify and hold harmless
you and any underwriter (as defined in the Act) for you, and each person, if
any, who respectively controls you or such underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any loss,
liability, claim, damage and expense whatsoever (including, but not limited
to, any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or
any claim whatsoever), joint or several, to which any of you or such
underwriter or such controlling person becomes subject, under the Act or
otherwise, insofar as such loss, liability, claim, damage and expense (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in (i) a
Registration Statement covering the Subject Stock, in the prospectus
contained therein, or in an amendment or supplement thereto or (ii) in any
application or other document or communication (in this Section collectively
called "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Subject Stock under the securities laws
thereof or filed with the Commission, or arise out of or 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;
provided, however, that
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the Company shall not be obligated to indemnify in any such case to the extent
that any such loss, claim, damage, expense or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon, and in conformity with, written
information respectively furnished by you or such underwriter or such
controlling person for use in the Registration Statement or any amendment or
supplement thereto, or any application, as the case may be.
If any action is brought against a person in respect of which indemnity
may be sought against, the Company pursuant to the foregoing paragraph, such
person shall promptly notify the Company in writing of the institution of
such action and the Company shall assume the defense of the action, including
the employment of counsel (satisfactory to the indemnified person in its
reasonable judgment) and payment of expenses. The indemnified person shall
have the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of such indemnified
person or unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of the action or the
Company shall not have employed counsel to have charge of the defense of the
action or the indemnified person shall have reasonably concluded that there
may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of the action on behalf of the
indemnified person), in any of which events these fees and expenses shall be
borne by the Company. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any
claim or action effected without its written consent. The Company's
indemnity agreements contained in this Section shall remain in full force and
effect regardless of any investigation made by or on behalf of any
indemnified person, and shall survive any termination of this Agreement. The
Company agrees promptly to notify you of the commencement of any litigation
or proceedings against the Company or any of its officers or directors in
connection with the Registration Statement pursuant to Section 3(c) or 3(d)
above.
If you choose to include any Subject Stock in a public offering
pursuant to Section 3(c) or 3(d) above, then you agree to indemnify and hold
harmless the Company and each of its directors and officers who have signed
any such Registration Statement and any underwriter for the Company (as
defined in the Act), and each person, if any, who controls the Company or
such underwriter within the meaning of the Act, to the same extent as the
indemnity by the Company in this Section 3(g) but only with respect to
statements or omissions, if any, made in such Registration Statement, or any
amendment or supplement thereto, or in any application in reliance upon, and
in conformity with, written information furnished by you to the Company for
use in the Registration Statement, or any amendment or supplement thereto, or
any application, as the case may be. In case any action shall be brought in
respect of which indemnity may be sought against you, you shall have the
rights and duties given to the Company, and the persons so indemnified shall
have the rights and duties given to you by the provisions of the first
paragraph of this Section.
The Company further agrees that if the indemnity provisions of the
foregoing paragraphs are held to be unenforceable, any holder of an
Underwriter Warrant or controlling person of such a holder may recover
contribution from the Company in an amount which, when added to contributions
such holder or controlling person has theretofore received or concurrently
receives from officers and directors of the Company or controlling persons of
the Company, will reimburse such holder or controlling person for all losses,
claims, damages or liabilities and legal or other expenses-, provided,
however, that if the full amount of the contribution specified in this
Section 3(g) is not permitted by law, then such holder or controlling person
shall be entitled to contribution from the Company and its officers,
directors and controlling persons to the full extent permitted by law.
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4. Exercise of Underwriter Warrants.
(a) Cash Exercise. Each Underwriter Warrant may be exercised in full
or in part (but not as to a fractional share of Common Stock) by the holder
thereof by surrender of the Warrant Certificate, with the form of
subscription at the end thereof duly executed by such holder, to the Company
at its principal office, accompanied by payment in cash or by certified or
bank cashiers' check payable to the order of the Company, in the respective
amount obtained by multiplying the number of shares of the Underlying Stock
to be purchased by the Purchase Price per share.
(b) Net Exercise. Notwithstanding anything to the contrary contained
in Section 4(a), any holder of an Underwriter Warrant may elect to exercise
the Underwriter Warrant and receive shares on a "net exercise" basis in an
amount equal to the value of the Underwriter Warrant by delivery of the form
of subscription attached to the Warrant Certificate and surrender of the
Underwriter Warrant at the principal office of the Company, in which event
the Company shall issue to the holder a number of shares computed using the
following formula:
X= (P)(Y)(A-B)
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A
Where: X= the number of shares of Common Stock to be issued to
holder.
P= the portion of the Underwriter Warrant being
exercised (expressed as a fraction).
Y= the total number of shares of Common Stock
issuable upon exercise of the Underwriter
Warrant.
A= the Current Market Price of one share of Common
Stock.
B= Purchase Price.
(c) Partial Exercise. Prior to the expiration of the Underwriter
Warrants, upon any partial exercise, the Company at its expense will
forthwith issue and deliver to or upon the order of the purchasing holder, a
new Warrant Certificate or Certificates of like tenor, in the name of the
holder thereof or as such holder (upon payment by such holder of any
applicable transfer taxes) may request calling in the aggregate for the
purchase of the number of shares of the Underlying Stock equal to the number
of such shares called for on the face of the Warrant Certificate (after
giving effect to any adjustment therein as provided in Section 6 below) minus
the number of such shares (after giving effect to such adjustment) designated
by the holder in the aforementioned form of subscription.
(d) Company to Reaffirm Obligations. The Company will, at the time
of any exercise of any Underwriter Warrant, upon the reasonable request of
the holder thereof, acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the shares of the Underlying Stock issued upon such exercise)
to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Agreement; provided, however, that if
the holder of an Underwriter Warrant shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to
afford to such holder any such rights.
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5. Delivery of Certificates, etc, on Exercise.
As soon as practicable after the exercise of any Underwriter Warrant in
fall or in part, and in any event within twenty days thereafter, the Company
at its expense (including the payment by it of any applicable issue taxes)
will cause to be issued in the name of and delivered to the purchasing holder
thereof, a certificate or certificates for the number of fully paid and
nonassessable shares of the Underlying Stock to which such holder shall be
entitled upon such exercise, plus in lieu of any fractional share to which
such holder would otherwise be entitled, cash in an amount determined
pursuant to Section 7(g), together with any other stock or other securities
and property (including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 6 below or otherwise.
6. Anti-dilution Provisions.
The Underwriter Warrants are subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding
shares of Common Stock (or Other Securities) shall be subdivided into a
greater number of shares or (ii) a dividend in Common Stock (or Other
Securities) shall be paid in respect of Common Stock (or Other Securities),
the Purchase Price per share in effect immediately prior to such subdivision
or at the record date of such dividend or distribution shall simultaneously
with the effectiveness of such subdivision or immediately after the record
date of such dividend or distribution be proportionately reduced; and if
outstanding shares of Common Stock (or Other Securities) shall be combined
into a smaller number of shares thereof, the Purchase Price per share in
effect immediately prior to such combination shall simultaneously with the
effectiveness of such combination be proportionately increased. Any dividend
paid or distributed on the Common Stock (or Other Securities) in stock or any
other securities convertible into shares of Common Stock (or Other
Securities) shall be treated as a dividend paid in Common Stock (or Other
Securities) to the extent that shares of Common Stock (or Other Securities)
are issuable upon the conversion thereof.
(b) Adjustments. Whenever the Purchase Price per share is adjusted
as provided in Section 6(a) above, the number of shares of the Underlying
Stock purchasable upon exercise of the Underwriter Warrants immediately prior
to such Purchase Price adjustment shall be adjusted, effective simultaneously
with such Purchase Price adjustment, to equal the product obtained
(calculated to the nearest full share) by multiplying such number of shares
of the Underlying Stock by a fraction, the numerator of which is the Purchase
Price per share in effect immediately prior to such Purchase Price adjustment
and the denominator of which is the Purchase Price per share in effect upon
such Purchase Price adjustment, which adjusted number of shares of the
Underlying Stock shall thereupon be the number of shares of the Underlying
Stock purchasable upon exercise of the Underwriter Warrants until further
adjusted as provided herein.
(c) Reorganizations. In case the Company shall be recapitalized by
reclassifying its outstanding Common Stock (or Other Securities) into a stock
with a different par value or by changing its outstanding Common Stock (or
Other Securities) with par value to stock without par value, then, as a
condition of such reorganization, lawful and adequate provision shall be made
whereby each holder of an Underwriter Warrant shall thereafter have the right
to purchase, upon the terms and conditions specified herein, in lieu of the
shares of Common Stock (or Other Securities) theretofore purchasable upon the
exercise of the Underwriter Warrants, the kind and amount of shares of stock
and other securities receivable upon such recapitalization by a holder of the
number of shares of Common Stock (or Other Securities) which the holder of an
Underwriter Warrant might have purchased immediately prior to such
recapitalization. If any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation, shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such consolidation, merger
or sale, lawful and adequate provisions shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the
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terms and conditions specified in this Warrant Agreement and in lieu of the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
consolidation, merger or sale not taken place, and in any such case, appropriate
provision shall be made with respect to the rights and interests of the holders
of Underwriter Warrants to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Purchase Price and of the
number of shares purchasable and receivable upon the exercise of the Underwriter
Warrants) shall thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof (including an immediate adjustment, by reason of such
consolidation or merger if the value so reflected is less than the Purchase
Price in effect immediately prior to such consolidation or merger). In the
event of a merger or consolidation of the Company with or into another
corporation as a result of which a number of shares of Common Stock of the
surviving corporation greater or lesser than the number of shares of Common
Stock of the Company outstanding immediately prior to such merger or
consolidation are issuable to holders of Common Stock of the Company, then the
Purchase Price in effect immediately prior to such merger or consolidation shall
be adjusted in the same manner as though there were a subdivision or combination
of the outstanding shares of Common Stock of the Company. The Company will not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed or delivered to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase. If a purchase, tender or exchange offer is
made to and accepted by the holders of a majority of the outstanding shares of
Common Stock of the Company, the Company shall not effect any consolidation,
merger or sale with the Person having made such offer or with any Affiliate of
such Person, unless prior to the consummation of such consolidation, merger or
sale the holders of Underwriter Warrants shall have been given a reasonable
opportunity (which shall in any event be deemed satisfied upon receipt of at
least 30 days' notice) to then elect to receive upon the exercise of Underwriter
Warrants either the stock, securities or assets then issuable with respect to
the Common Stock of the Company or the stock, securities or assets, or the
equivalent issued to previous holders of the Common Stock in accordance with
such offer.
(d) Effect of Dissolution or Liquidation. In case the Company shall
dissolve or liquidate all or substantially all of its assets, all rights
under this Agreement shall terminate as of the date upon which a certificate
of dissolution or liquidation shall be filed with the Secretary of the State
of Texas (or, if the Company theretofore shall have been merged or
consolidated with a corporation incorporated under the laws of another state,
the date upon which action of equivalent effect shall have been taken);
provided, however, that (i) no dissolution or liquidation shall affect the
rights under Section 6(c) of any holder of an Underwriter Warrant and (ii) if
the Company's Board of Directors shall propose to dissolve or liquidate the
Company, each holder of an Underwriter Warrant shall be given written notice
of such proposal at the earlier of (x) the time when the Company's
shareholders are first given notice of the proposal or (y) the time when
notice to the Company's shareholders is first required.
(e) Notice of Change of Purchase Price. Whenever the Purchase Price
per share or the kind or amount of securities purchasable under the
Underwriter Warrants shall be adjusted pursuant to any of the provisions of
this Agreement the Company shall forthwith thereafter cause to be sent to
each holder of an Underwriter Warrant, a certificate setting forth the
adjustments in the Purchase Price per share and/or in such number of shares,
and also setting forth in detail the facts requiring, such adjustments,
including, without limitation, a statement of the consideration received or
deemed
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to have been received by the Company for any additional shares of stock by it
requiring such adjustment. In addition, the Company at its expense shall within
90 days following the end of each of its fiscal years during the term of this
Agreement and promptly upon the reasonable request of any holder of an
Underwriter Warrant in connection with the exercise from time to time of all or
any portion of any Underwriter Warrant, cause independent certified public
accountants of recognized standing selected by the Company to compute any such
adjustment in accordance with the terms of the Underwriter Warrants and prepare
a certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based.
(f) Notice of a Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend payable out of earned surplus of the Company) or
other distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property,
or to receive any other right (ii) any capital reorganization of the Company,
or any reclassification or recapitalization of the capital stock of the
Company, or any transfer of all or substantially all of the assets of the
Company to, or consolidation or merger of the Company with or into, any other
person or (iii) any voluntary or involuntary dissolution or liquidation of
the Company, then and in each such event the Company will mad or cause to be
mailed to each holder of an Underwriter Warrant a notice specifying not only
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right and stating the amount and character of such
dividend, distribution or right, but also the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the
time, if any, as of which the holders of record of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or
other Securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be mailed
at least 20 days prior to the proposed record date therein specified.
7. Further Covenants of the Company.
(a) Reservation of Stock. The Company shall at all times reserve and
keep available, solely for issuance and delivery upon the exercise of the
Underwriter Warrants, all shares of the Underlying Stock from time to time
issuable upon the exercise of the Underwriter Warrants and shall take all
necessary actions to ensure that the par value per share, if any, of the
Underlying Stock is, at all times equal to or less than the then effective
Purchase Price per share.
(b) Title to Shares. All shares of the Underlying Stock delivered
upon the valid exercise of the Underwriter Warrants shall be validly issued,
fully paid and nonassessable; each holder of an Underwriter Warrant shall
receive good and marketable title to the Underlying Stock, free and clear of
all voting and other trust arrangements, liens, encumbrances, equities and
claims whatsoever; and the Company shall have paid all taxes, if any, in
respect of the issuance thereof.
(c) Listing on Securities Exchanges; Registration. If the Company at
any time shall fist any Common Stock on any national securities exchange, the
Company will, at its expense, simultaneously list on such exchange, upon
official notice of issuance upon the exercise of the Underwriter Warrants,
and maintain such listing of all shares of the Underlying Stock from time to
time issuable upon the exercise of the Underwriter Warrants; and the Company
will so list on any national securities exchange, will so register and will
maintain such listing of, any Other Securities if and at the time that any
securities of like class or similar type shall be listed on such national
securities exchange by the Company.
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(d) Exchange of Underwriter Warrants. Subject to Section 3(a)
hereof, upon surrender for exchange of any Warrant Certificate to the
Company, the Company at its expense will promptly issue and deliver to or
upon the order of the holder thereof a new Warrant Certificate or
certificates of like tenor, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct
calling in the aggregate for the purchase of the number of shares of the
Underlying Stock called for on the face or faces of the Warrant Certificate
or Certificates so surrendered.
(e) Replacement of Underwriter Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant Certificate and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant Certificate, the
Company, at the expense of the warrant holder will execute and deliver, in
lieu thereof, a new Warrant Certificate of like tenor.
(f) Reporting by the Company. The Company agrees that if it files a
Registration Statement during the term of the Underwriter Warrants, it will
use its best efforts to keep current in the filing of all forms and other
materials which it may be required to file with the appropriate regulatory
authority pursuant to the Exchange Act, and all other forms and reports
required to be filed with any regulatory authority having jurisdiction over
the Company.
(g) Fractional Shares. No fractional shares of Underlying Stock are
to be issued upon the exercise of any Underwriter Warrant, but the Company
shall pay a cash adjustment in respect of any fraction of a share which would
otherwise be issuable in an amount equal to the same fraction of the highest
market price per share of Underlying Stock on the day of exercise, as
determined by the Company, or if no transaction reported on such day, the
price as of the Trading Day immediately preceding such date on which trades
are reported.
8. Other Holders.
The Underwriter Warrants are issued upon the following terms, to all of
which each holder or owner thereof by the taking thereof consents and agrees
as follows: (a) any person who shall become a transferee, within the
limitations on transfer imposed by Section 3(a) hereof, of an Underwriter
War-rant properly endorsed shall take such Underwriter Warrant subject to the
provisions of Section 3(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Agreement shall be empowered to transfer absolute title by
endorsement and delivery thereof to a permitted bona fide purchaser for
value; (b) each prior taker or owner waives and renounces all of his equities
or rights in such Underwriter Warrant in favor of each such permitted bona
fide purchaser, and each such permitted bona fide purchaser shall acquire
absolute title thereto and to all rights presented thereby; (c) until such
time as the respective Underwriter Warrant is transferred on the books of the
Company, the Company may treat the registered holder thereof as the absolute
owner thereof for all purposes, notwithstanding any notice to the contrary;
and (d) all references to the word "you" in this Warrant Agreement shall be
deemed to apply with equal effect to any person to whom a Warrant Certificate
or Certificates have been transferred in accordance with the terms hereof,
and where appropriate, to any person holding shares of the Underlying Stock.
9. Miscellaneous.
All notices, certificates and other communications from or at the
request of the Company to the holder of any Underwriter Warrant shall be
mailed by first class, registered or certified mail, postage prepaid, to such
address as may have been furnished to the Company in writing by such holder,
or, until an address is so furnished, to the address of the last holder of
such Underwriter Warrant who has so furnished an address to the Company,
except as otherwise provided herein. For
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purposes of this Agreement, the date of such notice shall be the date of mailing
of such notice. This Agreement and any of the terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Texas. The headings in this Agreement
are for reference only and shall not limit or otherwise affect any of the terms
hereof. This Agreement together with the forms of instruments annexed hereto as
Schedule I, constitutes the full and complete agreement of the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this ------ day of June 1998, in Austin, Texas, by its proper
corporate officers thereunto duly authorized.
LINCOLN HERITAGE CORPORATION
By:
-----------------------------------------------
Xxxxxxxx X Xxxxxxx
President and
Chief Executive Officer
The above Warrant Agreement is confirmed this ----- day of June 1998.
TEJAS SECURITIES GROUP, INC.
By:
-----------------------------------------------
Xxxxxx X. Xxxxx, III
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SCHEDULE I
LINCOLN HERITAGE CORPORATION
Stock Purchase Warrant
Certificate Evidencing Right to Purchase 100,000 Shares of Common Stock
This is to certify that Tejas Securities Group, Inc. ("TSG") or
assigns, is entitled to purchase at any time or from time to time after 9
A.M., Austin, Texas time, on June ----, 1999 and until 9 A.M., Austin, Texas
time, on May ------, 2003 up to the above referenced number of shares of
Common Stock, $.01 par value of Lincoln Heritage Corporation, a Texas
corporation (the "Company"), for the consideration specified in Section 4 of
the Warrant Agreement dated June -----, 1998 between the Company and TSG (the
"Warrant Agreement"), pursuant to which this Warrant is issued. All rights
of the holder of this Warrant Certificate are subject to the terms and
provisions of the Warrant Agreement copies of which are available for
inspection at the office of the Company.
The shares of Common Stock issuable upon the exercise of this Warrant
have not been registered under the Securities Act of 1933, as amended (the
"Act"), and no distribution of such shares maybe made until the effectiveness
of a Registration Statement under the Act covering such Shares. Transfer of
this Warrant Certificate is restricted as provided in Section 3(a) of the
Warrant Agreement.
This Warrant has been issued to the registered owner in reliance upon
written representations necessary to ensure that this Warrant was issued in
accordance with an appropriate exemption from registration under any
applicable state and federal securities laws, rules and regulations. This
Warrant may not be sold, transferred or assigned unless, in the opinion of
the Company and its legal counsel, such sale, transfer or assignment will not
be in violation of the Act, applicable rules and regulations of the
Securities and Exchange Commission, and any applicable state securities laws.
Subject to the provisions of the Act and of such Warrant Agreement,
this Warrant Certificate and all rights hereunder are transferable, in whole
or in part, at the offices of the Company, by the holder hereof in person or
by duly authorized attorney, upon surrender of this Warrant Certificate,
together with the Assignment hereof duly endorsed. Until transfer of this
Warrant Certificate on the books of the Company, the Company may treat the
registered holder hereof as the owner hereof for all purposes.
Any shares of Common Stock (or other securities) which are acquired
pursuant to the exercise of this Warrant shall be acquired in accordance with
the Warrant Agreement and certificates representing all securities so
acquired shall bear a restrictive legend reading substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION
OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT
REQUIRED.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed on this ------ day of June 1998, in Austin, Texas, by its proper
corporate officers thereunto duly authorized.
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Lincoln Heritage Corporation
By: Attest:
------------------------------ ------------------------------
Xxxxxxxx X. Xxxxxxx
President and
Chief Executive Officer
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SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Lincoln Heritage Corporation
The undersigned, the holder of the enclosed Warrant Certificate, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ------------ shares of Common
Stock, $.01 par value, of Lincoln Heritage Corporation and either tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $--------------- therefor
or, if the undersigned elects pursuant to Section 4(b) of the Warrant
Agreement to convert the Warrant into Common Stock by net issuance, the
undersigned exercises the Warrant by exchange under the terms of said Section
4(b), and requests that the certificate or certificates for such shares be
issued in the name of and delivered to the undersigned.
Date:
------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant Certificate)
(Address)
Please indicate in the space below the number of shares called for on
the face of the Warrant Certificate (or, in the case of a partial exercise,
the portion thereof as to which the Warrant is being exercised), in either
case without making any adjustment for additional shares or other securities
or property or cash which, pursuant to the adjustment provisions of the
Warrant, may be deliverable upon exercise and whether the exercise is a cash
exercise pursuant to Section 4(a) of the Warrant Agreement or a net issuance
exercise pursuant to Section 4(b) of the Warrant Agreement.
Number of Shares:
--------------------
Cash:
--------------------------------
Net issuance:
------------------------
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ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto --------------------------------- the right represented by the enclosed
Warrant Certificate to purchase shares of Common Stock, $0.01 par value, of
Lincoln Heritage Corporation with full power of substitution in the premises.
The undersigned represents and warrants that the transfer, in whole in
or in part, of such right to purchase represented by the enclosed Warrant
Certificate is permitted by the terms of the Warrant Agreement pursuant to
which the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Assignment represents and warrants that he is familiar
with the terms of such Warrant Agreement and agrees to be bound by the terms
thereof with the same force and effect as if a signatory thereto.
Date:
------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant Certificate)
(Address)
Signed in the presence of:
------------------------------
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