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650,000 SHARES
LINCOLN HERITAGE CORPORATION
COMMON STOCK
October , 1998
UNDERWRITING AGREEMENT
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TEJAS SECURITIES GROUP, INC.
As Representative of the Several Underwriters
c/o: Tejas Securities Group, Inc.
0000 Xxxxxxx xx Xxxxx Xxx. South Building Two
Suite 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
Lincoln Heritage Corporation, a Texas corporation (the "Company"),
proposes to sell to you and the other underwriters named in Schedule I hereto
(collectively, the "Underwriters"), for whom Tejas Securities Group, Inc. is
acting as managing underwriter and representative (the "Representative"), in
the respective amounts set forth opposite each Underwriter's name in Schedule
I hereto, an aggregate of 650,000 shares of Common Stock, $0.01 par value (the
"Common Stock"), of the Company (such shares are hereinafter collectively
referred to as the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters: (i) the Underwriters' Option (as defined in
Section 2(b) hereof) to purchase up to an aggregate of 97,500 additional
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shares of Common Stock solely to cover over-allotments in the sale of the
Underwritten Securities (such additional shares of Common Stock are
collectively referred to herein as the "Option Securities"); and (ii) the
Underwriters' Warrants (as defined in Section 7 hereof) to purchase shares of
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Common Stock (such Underwriters' Warrants and shares of Common Stock issuable
pursuant thereto, are collectively referred to herein as the "Warrant
Securities"). The Underwritten Securities, the Option Securities and the
Warrant Securities are collectively referred to herein as the "Securities."
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "Effective Date" shall mean each date that the
Registration Statement (as defined below) and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the parties
hereto. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in Section 1(a) below with respect to the offering of
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the Securities, and any preliminary prospectus included in the Registration
Statement at the Effective Date that omits Rule 430A Information (as defined
below). Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the most recent Preliminary Prospectus which predates or
coincides with the Execution Time. "Prospectus" shall mean the final
prospectus with respect to the offering of the Securities that contains the
Rule 430A Information. "Registration Statement" shall mean (a) the
registration statement referred to in Section 1(a) below, including Exhibits
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and Financial Statements, in the form in which it has or shall become
effective, (b) in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined) or any settlement
date pursuant to Section 3(c) hereof, such registration statement as so
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amended on such date and (c) in the event of the filing of any abbreviated
registration statement increasing the size of the offering (a "Rule 462
Registration Statement"), pursuant to Rule 462(b) (as defined below), which
registration statement became effective upon filing the Rule 462 Registration
Statement. Such term shall include Rule 430A Information (as defined below)
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 424," "Rule 462(b)" and "Rule 430A" refer to such rules promulgated
under the Securities Act of 1933, as amended (the "Act"). "Rule 430A
Information" means information with respect to the Securities and the offering
thereof permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, each Underwriter
that:
(a) The Company meets the requirements for the use of Form S-1 under the
Act and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including one or more related
preliminary prospectuses ("Preliminary Prospectus"), on Form S-1 (Commission
File No. 333-50525) (the "Registration Statement") for the registration under
the Act of the Underwritten Securities and the Option Securities. The Company
may have filed one or more amendments thereto, including related Preliminary
Prospectuses, each of which has previously been furnished to you. The Company
will next file with the Commission either prior to effectiveness of such
Registration Statement, a further amendment thereto (including the form of
Prospectus) or, after effectiveness of such Registration Statement, a
Prospectus in accordance with Rules 430A and 424(b)(1) or (4). As filed, such
amendment and form of Prospectus, or such Prospectus, shall include all Rule
430A Information and, except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not completed
at the Execution Time, shall contain only such specific additional information
and other changes (beyond that contained in the latest Preliminary Prospectus)
as the Company has advised you in writing, prior to the Execution Time, will
be included or made therein.
(b) Each of the Preliminary Prospectuses dated April 20, 1998, August 7,
1998, August 24, 1998 and October --, 1998, at the time of filing thereof,
conformed in all material respects with the applicable requirements of the Act
and the rules and regulations thereunder and did not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If the Effective Date is prior to or simultaneous with the
Execution Time, (i) on the Effective Date, the Registration Statement
conformed in all material respects to the requirements of the Act and the
rules and regulations thereunder and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, and (ii)
at the Execution Time, the Registration Statement conforms, and at the time of
filing of the Prospectus pursuant to Rule 424(b), the Registration Statement
and the Prospectus will conform, in all material respects to the requirements
of the Act and the rules and regulations thereunder, and neither of such
documents includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state a material fact required to be stated therein
or necessary in order to make the statements therein (and, in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading. If the Effective Date is subsequent to the Execution Time, on the
Effective Date, the Registration Statement and the Prospectus will conform in
all material respects to the requirements of the Act and the rules and
regulations thereunder, and neither of such documents will contain any untrue
statement of any material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
(and, in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading. The two preceding sentences do not apply
to statements in or omissions from the Registration Statement or the
Prospectus (or any supplements thereto) based upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representative specifically for use in connection with
the preparation of the Registration Statement or the Prospectus (or any
supplements thereto).
(c) The Company has no subsidiaries other than those listed in Exhibit
21.1 to the Registration Statement as of the Effective Date (the
"Subsidiaries").
(d) The Company and each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate power
and corporate authority to own its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which it conducts its business or owns property and in which the failure,
individually or in the aggregate, to be so qualified would have a material
adverse effect on the properties, assets, operations, business, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries,
taken as a whole ("Material Adverse Effect"). Each of the Company and each
Subsidiary has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all government regulatory officials and
bodies, to own its properties and conduct its business as described in the
Prospectus except where the absence of any such authorization, approval,
order, license, certificate or permit would not have a Material Adverse
Effect.
(e) Except as described in the Registration Statement, the Company does
not own any shares of capital stock or any other securities of any corporation
or any equity interest in any firm, partnership, association or other entity
other
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than the Subsidiaries.
(f) The Company's equity capitalization is as set forth in the
Prospectus; the capital stock of the Company conforms in all material respects
to the description thereof contained in the Prospectus; all outstanding shares
of Common Stock have been duly and validly authorized and issued and are fully
paid and nonassessable, and the certificates therefor are in valid and
sufficient form; there are, and, on the Effective Date, the Closing Date (as
defined in Section 3(a) hereof) and any settlement date pursuant to Section
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3(b) hereof, there will be, no other classes of stock outstanding except
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Common Stock; all outstanding options to purchase shares of Common Stock have
been duly and validly authorized and issued; except as described in the
Registration Statement, there are, and, on the Closing Date and any settlement
date pursuant to Section 3(b) hereof, there will be, no options, warrant or
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rights to acquire, or debt instruments convertible into or exchangeable for,
or other agreements or understandings to which the Company is a party,
outstanding or in existence, entitling any person to purchase or otherwise
acquire shares of capital stock of the Company; the issuance and sale of the
Securities have been duly and validly authorized and, when issued, delivered
and paid for, the Securities will be fully paid and nonassessable and free
from preemptive rights, and will conform in all respects to the description
thereof contained in the Prospectus; the Underwriters' Warrants will, when
issued, constitute valid and binding obligations of the Company enforceable in
accordance with their terms and the Company has reserved a sufficient number
of shares of Common Stock for issuance upon exercise thereunder; the
Securities will, when issued, possess the rights, privileges and
characteristics as described in the Prospectus; and the certificates for the
Securities are in valid and sufficient form. Each offer and sale of
securities of the Company referred to in Item 15 of Part II of the
Registration Statement, if any, was effected in compliance with the Act and
the rules and regulations thereunder, and with all applicable blue sky ("Blue
Sky") laws.
(g) The Securities (other than the Warrant Securities) have been
approved for listing on the Pacific Exchange, Inc. ("Pacific Exchange"), upon
notice of issuance thereof; the Common Stock is registered pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Company has taken no action designed to, or likely to, have the effect
of terminating the registration of the Common Stock under the Exchange Act,
nor has the Company received any notification that the Commission is
contemplating terminating such registration or listing.
(h) Other than as described in the Prospectus, there is no pending or, to
the best knowledge of the Company, threatened action, suit or proceeding
before any court or governmental agency, authority or body, domestic or
foreign, or any arbitrator involving the Company or any Subsidiary of a
character required to be disclosed in the Registration Statement or the
Prospectus. There is no contract or other document of a character required to
be described in the Registration Statement or Prospectus or to be filed as an
exhibit that is not described or filed as required.
(i) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as rights of indemnity and contribution hereunder may be limited by public
policy and except as the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and general principles of equity.
(j) The Company has full corporate power and corporate authority to enter
into and perform its obligations under this Agreement and to issue, sell and
deliver the Securities in the manner provided in this Agreement. The Company
has taken all necessary corporate action to authorize the execution and
delivery of, and the performance of its obligations under, this Agreement.
(k) Neither the offering, issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated herein, nor the
fulfillment of the terms hereof, will conflict with or result in a breach or
violation of, or constitute a default under, or result in the imposition of a
lien on any properties of the Company or any Subsidiary or an acceleration of
indebtedness pursuant to, the Articles of Incorporation, as amended, or bylaws
of the Company, or any Subsidiary, as currently in effect, or any of the terms
of any indenture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any of its properties are
bound, or any law, order, judgment, decree, rule or regulation applicable to
the Company or any Subsidiary of any court, regulatory body, administrative
agency, governmental body, stock exchange or arbitrator having jurisdiction
over the Company or any Subsidiary. None of the Company nor any Subsidiary is
in violation of its Articles of Incorporation or similar charter document or
bylaws, as each is currently in effect, or in breach of or default under any
of the terms of any indenture or other agreement or instrument to which it is
a party or by which it or its properties are bound, which breach or default
would, individually or in the aggregate, have a Material Adverse Effect.
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(l) Except as disclosed in the Prospectus, no person has the right,
contractual or otherwise, to cause the Company to issue to it any shares of
capital stock in consequence of the issue and sale of the Securities, nor does
any person have preemptive rights, or rights of first refusal or other rights
to purchase any of the Securities. Except as referred to in the Prospectus, no
person holds a right to require or participate in a registration under the Act
of Common Stock, Preferred Stock or any other equity securities of the
Company.
(m) The Company has not (i) taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result in, under
the Exchange Act, or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities
(other than those actions permitted by applicable law) or (ii) effected any
sales of shares of securities that are required to be disclosed in response to
Item 15 of Part II of the Registration Statement (other than transactions
disclosed in the Registration Statement), if any.
(n) No consent, approval, authorization or order of, or declaration or
filing with, any court or governmental agency or body is required to be
obtained or filed by or on behalf of the Company in connection with the
transactions contemplated herein, except such as may have been obtained or
made and registration of the Securities under the Act, and such as may be
required under the Blue Sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters.
(o) To the best of the Company's knowledge, the accountants who have
certified the Company's consolidated financial statements and the financial
statements of Harbourton filed with the Commission as part of the Registration
Statement are independent accountants as required by the Act.
(p) No stop order preventing or suspending the use of any Preliminary
Prospectus has been issued, and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no stop order suspending the sale of the Securities in any
jurisdiction has been issued and no proceedings for that purpose have been
instituted or, to the best knowledge of the Company, threatened or are
contemplated; and any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise) has
been complied with.
(q) Neither the Company nor any Subsidiary has sustained since December
31, 1997, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree, and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there have not been any changes in
the capital stock or long-term debt of the Company, or any material adverse
change, or a development known to the Company that could reasonably be
expected to cause or result in a material adverse change, in the general
affairs, management, financial position, shareholder's equity, results of
operations or prospects of the Company and the Subsidiaries, taken as a whole,
otherwise than as set forth in the Prospectus. Except as set forth in the
Prospectus, there exists no present condition or state of facts or
circumstances known to the Company involving its or any Subsidiary's customers
that the Company can now reasonably foresee would have a Material Adverse
Effect or that would result in a termination or cancellation of any agreement
with any customer whose purchases, individually or in the aggregate, are
material to the business of the Company and the Subsidiaries, taken as a
whole, or that would result in any material decrease in sales to any such
customer or purchases from any supplier, or that would prevent the Company or
any Subsidiary from conducting its business as described in the Prospectus in
essentially the same manner in which it has heretofore been conducted.
(r) The Consolidated Financial Statements and the related notes of the
Company, including, without limitation, transactions with unconsolidated
Subsidiaries, if any, included in the Registration Statement and the
Prospectus present fairly the consolidated financial position, results of
operations, cash flow and changes in shareholder's equity of the Company and
the Subsidiaries at the dates and for the periods indicated, subject in the
case of the Consolidated Financial Statements for interim periods, to normal
and recurring year-end adjustments. The Consolidated Financial Statement
schedules included in the Registration Statement present fairly the
information required to be stated therein. Such Consolidated Financial
Statements and schedules were prepared in conformity with the Commission's
rules and regulations and in accordance with generally accepted accounting
principles, except as stated therein. The financial information of the Company
and the Subsidiaries set forth in the Prospectus under the captions
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" fairly present, on the basis stated in
the
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Prospectus, the information included therein.
(s) The Company and each Subsidiary owns or possesses, or has the right
to use pursuant to licenses, sublicenses, agreements, permissions or
otherwise, adequate patents, copyrights, trade names, trademarks, service
marks, licenses and other intellectual property rights necessary to carry on
its business as described in the Prospectus, and, except as set forth in the
Prospectus, none of the Company nor any Subsidiary has received any notice of
either (i) default under any of the foregoing or (ii) infringement of or
conflict with asserted rights of others with respect to, or challenge to the
validity of, any of the foregoing which, in the aggregate, if the subject of
an unfavorable decision, ruling or finding, could reasonably be expected to
have a Material Adverse Effect, and the Company knows of no fact which could
reasonably be anticipated to serve as the basis for any such notice.
(t) Subject to such exceptions as are not reasonably likely to result in
a Material Adverse Effect, (A) the Company and each Subsidiary owns all
properties and assets described in the Registration Statement and the
Prospectus as being owned by it and (B) the Company and each Subsidiary has
good title to all properties and assets owned by it, free and clear of all
liens, charges, encumbrances and restrictions, except as otherwise disclosed
in the Prospectus and except for (i) liens for taxes not yet due, (ii)
mortgages and liens securing debt reflected on the Consolidated Financial
Statements included in the Prospectus, (iii) materialmen's, workmen's,
vendor's and other similar liens incurred in the ordinary course of business
that are not delinquent, individually or in the aggregate, and do not have a
Material Adverse Effect, or on the use of such properties or assets by the
Company or any Subsidiary, in its respective business. All leases to which
the Company or a Subsidiary is a party and which are material to the conduct
of the business of the Company and the Subsidiaries are valid and binding and
no material default by the Company or the Subsidiary a party thereto has
occurred and is continuing thereunder; and each of the Company and each
Subsidiary enjoys peaceful and undisturbed possession under all such material
leases to which it is a party as lessee.
(u) The books, records and accounts of the Company accurately and fairly
reflect, in reasonable detail, the transactions in and dispositions of the
assets of the Company and the Subsidiaries. The system of internal accounting
controls maintained by the Company is sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) Except as set forth in the Prospectus, subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, none of the Company or its Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, in each case, which are likely to result in a Material Adverse
Effect, and there has not been any payment of or declaration to pay any
dividends or any other distribution with respect to the shares of the capital
stock of the Company.
(w) The Company and each Subsidiary is in compliance in all material
respects with all applicable laws, rules and regulations, including, without
limitation, employment and employment practices, immigration, terms and
conditions of employment, health and safety of workers, customs and wages and
hours, and is not engaged in any unfair labor practice. No property of the
Company or any Subsidiary has been seized by any governmental agency or
authority as a result of any violation by the Company or any Subsidiary or any
independent contractor of the Company or any Subsidiary of any provisions of
law. There is no pending unfair labor practice complaint or charge filed with
any governmental agency against the Company or any Subsidiary. There is no
labor strike, material dispute, slow down or work stoppage actually pending
or, to the best knowledge of the Company or any Subsidiary, threatened against
or affecting the Company or any Subsidiary; no grievance or arbitration
arising out of or under any collective bargaining agreements is pending
against the Company or any Subsidiary; no collective bargaining agreement
which is binding on the Company or any Subsidiary and restricts the Company or
such Subsidiary from relocating or closing any of its operations; and none of
the Company or any Subsidiary has experienced any work stoppage or other labor
dispute at any time.
(x) The Company has accurately, properly and timely (giving effect to any
valid extensions of time) filed all federal, state, local and foreign tax
returns (including all schedules thereto) that are required to be filed, and
has paid all taxes and assessments shown thereon. All tax deficiencies
asserted or assessed against the Company by the Internal Revenue Service
("IRS") or any other foreign or domestic taxing authority have been paid or
finally settled with no remaining
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amounts owed. Neither the IRS nor any other foreign or domestic taxing
authority has examined any tax returns of the Company nor has the IRS or any
foreign or domestic taxing authority asserted a position which conflicts with
any tax position taken by the Company. The charges, accruals and reserves
shown in the Consolidated Financial Statements included in the Prospectus in
respect of taxes for all fiscal periods to date are adequate, and nothing has
occurred subsequent to the date of such Consolidated Financial Statements that
makes such charges, accruals or reserves inadequate. The Company is not aware
of any proposal (whether oral or written) by any taxing authority to adjust
any tax return filed by the Company.
(y) With such exceptions as are not likely to result in a Material
Adverse Effect, the Company and each Subsidiary is in compliance with all
federal, state, foreign and local laws and regulations relating to pollution
or protection of human health or the environment ("Environmental Laws"), there
are no circumstances that may prevent or interfere with such compliance other
than as set forth in the Prospectus, and neither the Company nor any
Subsidiary has received any notice or other communication alleging a currently
pending violation of any Environmental Laws. With such exceptions as are not
likely to result in a Material Adverse Effect, other than as set forth in the
Prospectus, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge or disposal of any chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, that may result in
the imposition of liability on the Company or any Subsidiary or any claim
against the Company or any Subsidiary or, to the Company's best knowledge,
against any person or entity whose liability for any claim the Company or any
Subsidiary has or may have assumed either contractually or by operation of
law, and neither the Company nor any Subsidiary has received any notice or
other communication concerning any such claim against the Company or any
Subsidiary or such person or entity.
(z) Except as set forth in the Prospectus, there are no outstanding
loans, advances or guaranties of indebtedness by the Company to or for the
benefit of its affiliates, or any of its officers or directors, or any of the
members of the families of any of them, which are required to be disclosed in
the Registration Statement or the Prospectus.
(aa) The Company is not an investment company subject to registration
under the Investment Company Act of 1940, as amended.
(bb) Except as set forth in the Prospectus, each of the Company and each
Subsidiary has insurance of the types and in the amounts that it reasonably
believes is adequate for its business, including, but not limited to, casualty
and general liability insurance covering all real and personal property owned
or leased by the Company or such Subsidiary, as applicable, against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against.
(cc) None of the Company nor any Subsidiary has at any time; (i) made any
contributions to any candidate for political office, or failed to disclose
fully any such contribution, in violation of law; (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or allowed by all applicable laws; or (iii) violated, nor is it in
violation of, any provision of the Foreign Corrupt Practices Act of 1977.
(dd) The preparation and the filing of the Registration Statement with
the Commission have been duly authorized by and on behalf of the Company, and
the Registration Statement has been duly executed pursuant to such
authorization by and on behalf of the Company.
(ee) All documents delivered or to be delivered by the Company or any of
its directors or officers to the Underwriters, the Commission or any state
securities law administrator in connection with the issuance and sale of the
Securities were, on the dates on which they were delivered, and will be, on
the dates on which they are to be delivered, true, complete and correct in all
material respects.
(ff) Except as described in the Prospectus, none of the Company or any
Subsidiary maintains, nor does any other person maintain on behalf of the
Company or any Subsidiary, any retirement, pension (whether deferred or
non-deferred, defined contribution or defined benefit) or money purchase plan
or trust. There are no unfunded liabilities of the Company or any Subsidiary
with respect to any such plans or trusts that are not accrued or otherwise
reserved for on the Consolidated Financial Statements.
(gg) Any certificates signed by an officer of the Company and delivered
to the Representative or the Underwriters
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or to counsel for the Underwriters shall also be deemed a representation and
warranty of the Company to the Underwriters as to the matters covered thereby.
Any certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render the opinions referred to in Section 6(b) will
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also be furnished to the Representative and counsel for the Underwriters and
shall be deemed to be additional representations and warranties by the Company
to the Underwriters as to the matters covered thereby.
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to issue
and sell to the Underwriters an aggregate of 650,000 shares of Common Stock.
Each of the Underwriters agrees, severally and not jointly, to purchase from
the Company the number of Underwritten Securities set forth opposite its name
in Schedule I hereto. The purchase price per Underwritten Security to be paid
by the several Underwriters to the Company shall be $-.-- per share.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option (the "Underwriters' Option") to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 97,500 shares of Common
Stock, at the purchase price of $-.-- per share for use solely in covering any
over-allotments made by the Representative for the account of the Underwriters
in the sale and distribution of the Underwritten Securities. Said
Underwriters' Option may be exercised in whole or in part at any time on or
before the 45th day after the Effective Date upon written or telegraphic
notice by the Representative to the Company setting forth the number of Option
Securities which the several Underwriters are electing to purchase pursuant to
the Underwriters' Option and the settlement date. Delivery of certificates
for such Option Securities by the Company and payment therefor to the Company
shall be made as provided in Section 3 hereof. The number of Option
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Securities to be so purchased by each Underwriter pursuant to the
Underwriters' Option shall be determined by multiplying the number of Option
Securities to be sold by the Company pursuant to the Underwriters' Option, as
exercised, by a fraction, the numerator of which is the number of Underwritten
Securities to be purchased by such Underwriter as set forth opposite its name
in Schedule I and the denominator of which is the total number of Underwritten
Securities to be purchased by all of the Underwriters as set forth on
Schedule I (subject to such adjustments to eliminate any fractional share
purchases as the Representative in its discretion may make).
3. DELIVERY AND PAYMENT.
(a) If the Underwriters' Option is exercised on or before the third
business day prior to the Closing Date (as defined below), delivery of the
certificates for the shares of Common Stock described in Sections 2(a) and
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2(b) hereof shall be made by the Company through the facilities of the
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Depository Trust Company ("DTC"), and payment therefor, shall be made at the
office of the Company at 9:00 a.m. Central Daylight Savings Time, on October
--, 1998 or such later date (but not later than [45 days after effectiveness]
as the Representative shall designate, which date and time may be postponed by
agreement among the Representative and the Company or as provided in Section 9
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hereof (such date, time of delivery and payment for such Securities being
herein called the ("Closing Date"). Delivery of the certificates for such
Securities to be purchased on the Closing Date shall be made as provided in
the preceding sentence for the respective accounts of the several Underwriters
against payment by the several Underwriters through Tejas Securities Group,
Inc. of the aggregate purchase price of such Securities being sold by the
Company, to or upon the order of the Company, by certified or official bank
check or checks drawn on or by a Dallas Clearing House bank. Certificates for
such Securities shall be registered in such names and in such denominations as
the Representative may request not less than one full business day in advance
of the Closing Date. The Company agrees to have the certificates for the
Securities to be purchased on the Closing Date available at the office of the
DTC, not later than 9:00 a.m. Eastern Standard Time at least one business day
prior to the Closing Date.
(b) If the Underwriters' Option is exercised after the third business day
prior to the Closing Date, (i) delivery of the certificates for the shares of
Common Stock described in Section 2(a) hereof and payment therefor will be
------------
governed by the provisions of Section 3(a) hereof and (ii) the Company will
------------
deliver (at the expense of the Company) on the date specified by the
Representative (which shall not be less than one nor more than five business
days after exercise of the Underwriters' Option), certificates for the shares
of Common Stock described in Section 2(b) hereof in such names and
------------
denominations as the Representative shall have requested against payment at
the office of the Company of the purchase price therefor, to or upon the order
of the Company, by certified or official bank check or checks drawn on or by a
Dallas Clearing House bank. If settlement for such Securities occurs after the
Closing Date, the Company will deliver to the Representative on the settlement
date for such Securities, and the obligation of the Underwriters to purchase
such Securities shall be conditioned
7
8
upon receipt of, supplemental opinions, certificates and letters confirming as
of such date the opinions, certificates and letters delivered on the Closing
Date pursuant to Section 6 hereof. The Company agrees to have the certificates
---------
for the Securities to be purchased after the Closing Date available at the
office of the DTC not later than 9:00 a.m. Eastern Standard Time at least one
business day prior to the settlement date.
4. OFFERING BY UNDERWRITERS. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the
Prospectus.
5. AGREEMENTS. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution Time,
to become effective as promptly as possible. If the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the Prospectus
is otherwise required under Rule 424(b), the Company will file the Prospectus,
properly completed, pursuant to Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representative of such timely
filing. The Company will promptly advise the Representative (i) when the
Registration Statement shall have become effective, (ii) when any
post-effective amendment thereto shall have become effective, (iii) of any
request by the Commission for any amendment or supplement of the Registration
Statement or the Prospectus or for any additional information with respect
thereto, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the receipt by the
Company of any notification with respect to the institution or threatening of
any proceeding for that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or suspension and, if issued, to
obtain as soon as possible the withdrawal thereof. The Company will not file
any amendment to the Registration Statement or supplement to the Prospectus
without the prior consent of the Representative, which consent shall not be
unreasonably withheld or delayed. The Company will prepare and file with the
Commission, promptly upon your request, any amendment to the Registration
Statement or supplement to the Prospectus that you reasonably determine to be
necessary or advisable in connection with the distribution of the Securities
by you, and will use its best efforts to cause the same to become effective as
promptly as possible.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it otherwise shall be necessary to supplement the
Prospectus to comply with the Act or the rules or regulations thereunder, the
Company will promptly prepare and file with the Commission, subject to Section
-------
5(a) hereof, a supplement that will correct such statement or omission or a
----
supplement that will effect such compliance.
(c) As soon as practicable (but not later than eighteen months after the
effective date of the Registration Statement), the Company will make generally
available to its security holders and to the Representative an earning
statement or statements (which need not be audited) of the Company covering a
period of at least twelve months after the Effective Date (but in no event
commencing later than 90 days after such date), which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 promulgated thereunder.
(d) The Company will furnish to each of you and counsel for the
Underwriters, without charge, one signed copy of the Registration Statement
and any amendments thereto (including exhibits thereto) and to each other
Underwriter a conformed copy of the Registration Statement and any amendments
thereto (without exhibits thereto) and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Act, as many copies of the
Prospectus and each Preliminary Prospectus and any supplements thereto as the
Representative may reasonably request.
(e) The Company will take all actions necessary for the registration or
qualification of the Securities for sale under the laws of such jurisdictions
within the United States and its territories as the Representative may
designate, will maintain such qualifications in effect so long as required for
the distribution of the Securities and will pay the fee of the National
Association of Securities Dealers ("NASD") in connection with its review of
the offering, provided that the Company shall not be required to qualify as a
foreign corporation or to consent to service of process under the laws of any
such jurisdiction (except service of process with respect to the offering and
sale of the Securities).
(f) The Company will apply the net proceeds from the offering received by
it in the manner set forth under the
8
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caption "Use of Proceeds" in the Prospectus.
(g) The Company will (i) cause the Securities (other than the Warrant
Securities) to be listed on Pacific Exchange and (ii) comply with all
registration, filing and reporting requirements of the Exchange Act and
Pacific Exchange which may from time to time be applicable to the Company.
(h) During the five-year period commencing on the date hereof, the
Company will furnish to its shareholders, as soon as practicable after the end
of each respective period, annual reports (including financial statements
audited by independent certified public accountants) and will furnish to you
and, upon request, to the other Underwriters hereunder; (i) concurrent with
furnishing such quarterly reports to its shareholders, statements of income
and other information of the Company for such quarter in the form furnished to
the Company's shareholders; (ii) concurrent with furnishing such annual
reports to its shareholders, a balance sheet of the Company as of the end of
such fiscal year, together with statements of income and of cash flow of the
Company for such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of its independent certified public
accountants; (iii) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD,
Pacific Exchange or any other securities exchange on which any of the
Company's securities may be listed; (iv) every press release and every
material news item or article in respect of the Company or its affairs which
was released or prepared by the Company; and (v) any additional information of
a public nature concerning the Company or its business that you may reasonably
request. During such five-year period, if the Company shall have active
Subsidiaries, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and such Subsidiaries are
consolidated, and shall be accompanied by similar financial statements for any
significant subsidiary that is not so consolidated.
(i) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be
the same entity as the transfer agent) for the Securities.
(j) The Company has reserved and shall continue to reserve a sufficient
number of shares of Common Stock for issuance upon exercise of the
Underwriters' Warrants.
(k) If the Company elects to rely on Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 p.m., Washington D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase the Securities described in Sections 2(a) and 2(b)
------------- ----
hereof shall be subject to (i) the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution
Time, the Closing Date and (in the case of any Securities delivered after the
Closing Date) any settlement date pursuant to Section 3(b) hereof, (ii) the
------------
accuracy of the statements of the Company made in any certificates delivered
pursuant to the provisions hereof, (iii) the performance by the Company of its
obligations hereunder, and (iv) the following additional conditions:
(a) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under
the Act, such post-effective amendment shall become effective) not later than
--- p.m. ----- time, on the execution date hereof or at such later date and
time as you may approve in writing and, at the Closing Date (and any
settlement date pursuant to Section 3(b) hereof), no stop order suspending the
------------
effectiveness of the Registration Statement or any qualification in any
jurisdiction shall have been issued and no proceedings for that purpose shall
have been initiated or, to the best knowledge of the Company, threatened by
the Commission.
(b) The Company shall have furnished to the Representative:
(A) the opinion of Wittner, Poger, Xxxxxxxxx, Spewak and Xxxxxxx,
P.C., counsel for the Company, addressed to the Underwriters and dated the
Closing Date (and any settlement date pursuant to Section 3(b) hereof), or
------------
other evidence satisfactory to the Representative to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and corporate authority to own its properties and conduct its
business as described in the Prospectus.
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The Company has all necessary and material authorizations, approvals,
orders, licenses, certificates and permits of and from all government
regulatory officials and bodies, to own its properties and conduct its
business as described in the Prospectus in Texas and Missouri, except
where failure to obtain such authorizations, approvals, orders, licenses,
certificates or permits would not have a Material Adverse Effect.
(ii) To the best knowledge of such counsel, after due inquiry,
the Company does not own any shares of capital stock or any other equity
securities of any corporation or any equity interest in any firm,
partnership, association or other entity other than as described in the
Prospectus or as set forth on Exhibit 21.1 of the Registration Statement,
except for ownership interests that would not have a Material Adverse
Effect.
(iii) The Company has an authorized share capitalization as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
all outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable and the
certificates therefor are in valid and sufficient form in accordance with
applicable state law; there are no other classes of stock outstanding
except Common Stock; all outstanding options to purchase shares of Common
Stock have been duly and validly authorized and issued; except as
described in the Prospectus, there are no options, warrants or rights to
acquire, or debt instruments convertible into or exchangeable for, or
other agreements or understandings to which the Company is a party,
outstanding or in existence, entitling any person to purchase or
otherwise acquire any shares of capital stock of the Company; the issuance
and sale of the Securities have been duly and validly authorized and,
when issued and delivered and paid for, the Securities will be fully paid
and nonassessable and free from preemptive rights, and will conform in
all respects to the description thereof contained in the Prospectus; the
Underwriters' Warrants constitute valid and binding obligations of the
Company enforceable in accordance with their terms (except for
bankruptcy, insolvency, creditor's rights generally and to equitable
principles) and the Company has reserved a sufficient number of shares of
Common Stock for issuance upon exercise thereof; the Securities (other
than the Warrant Securities) have been approved for listing on Pacific
Exchange upon notice of issuance thereof; and the certificates for the
Securities are in valid and sufficient form. Each offer and sale of
securities of the Company described in Item 15 of Part II of the
Registration Statement, if any, was effected in compliance with the Act
and the rules and regulations thereunder.
(iv) Other than as described in the Prospectus, there is no
pending or, to the best knowledge of such counsel, threatened action,
suit or proceeding before any court or governmental agency, authority or
body, domestic or foreign, or any arbitrator involving the Company or any
Subsidiary of a character required to be disclosed in the Registration
Statement or the Prospectus that is not adequately disclosed in the
Prospectus, and, to the best knowledge of such counsel, there is no
contract or other document of a character required to be described in the
Registration Statement or the Prospectus, or to be filed as an exhibit,
which is not described or filed as required.
(v) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
agreement and obligation of the Company enforceable against it in
accordance with its terms (subject to standard bankruptcy and equitable
remedy exceptions, and limitations under the Act as to the enforceability
of indemnification provisions).
(vi) The Company has full corporate power and corporate
authority to enter into and perform its obligations under this Agreement
and to issue, sell and deliver the Securities in the manner provided in
this Agreement; and the Company has taken all necessary corporate action
to authorize the execution and delivery of, and the performance of its
obligations under, this Agreement.
(vii) Neither the offering, issue and sale of the Securities and
application of the proceeds as contemplated in the Registration Statement,
nor the consummation of any other of the transactions contemplated
herein, nor the fulfillment of the terms hereof, will conflict with or
result in a breach or violation of, or constitute a default under, or
result in the imposition of a lien on any properties of the Company or
any Subsidiary, or an acceleration of indebtedness pursuant to, the
Articles of
10
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Incorporation, as amended, (or other charter document) or bylaws of the
Company or any Subsidiary, or any of the terms of any indenture or other
agreement or instrument to which the Company or any Subsidiary is a party
or by which its properties are bound, or any law, order, judgment,
decree, rule or regulation applicable to the Company or any Subsidiary of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Company or any Subsidiary. The Company is
not in violation of its Articles of Incorporation, as amended, or bylaws.
To such counsel's actual knowledge, there are no events of default (as
defined in the applicable indenture, agreement or instrument) existing
under any of the terms of any indenture or other agreement or instrument
to which the Company is a party or by which it or its properties are
bound, which Events of Default would, individually or in the aggregate,
have a Material Adverse Effect.
(viii) Except as disclosed in the Prospectus, to the best of
such counsel's knowledge, after due inquiry, no person has the right,
contractual or otherwise, to cause the Company to issue to it any shares
of capital stock in consequence of the issue and sale of the Securities
to be sold by the Company hereunder nor does any person have preemptive
rights, or rights of first refusal or other rights to purchase any of the
Securities. Except as referred to in the Prospectus, to the best of such
counsel's knowledge, after due inquiry, no person holds a right to
require or participate in a registration under the Act of Common Stock or
any other equity securities of the Company.
(ix) No consent, approval, authorization or order of, or
declaration or filing with, any court or governmental agency or body is
required to be obtained or filed by or on behalf of the Company in
connection with the transactions contemplated herein, except such as may
have been obtained or made and registration of the Securities under the
Act, and such as may be required under the Blue Sky laws of any
jurisdiction.
(x) To such counsel's actual knowledge, the Company is not in
violation of or default under any judgment, ruling, decree or order or
any statute, rule or regulation of any court or other United States
governmental agency or body, including any applicable laws respecting
employment, immigration and wages and hours, in each case, where such
violation or default could have a Material Adverse Effect. To such
counsel's actual knowledge, the Company is not involved in any labor
dispute nor is any labor dispute threatened.
(xi) The preparation and the filing of the Registration
Statement with the Commission have been duly authorized by and on behalf
of the Company, and the Registration Statement has been duly executed
pursuant to such authorization by and on behalf of the Company.
(B) the opinion of Xxxxxxxx Xxxxxx, special securities counsel for
the Company, addressed to the Underwriters and dated the Closing Date (and any
settlement date pursuant to Section 3(b) hereof), or other evidence
------------
satisfactory to the Representative to the effect that:
(i) The Registration Statement has become effective under the
Act; any required filing of the Prospectus or any supplements thereto
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); 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
threatened; the Registration Statement and the Prospectus (and any
supplements thereto) comply as to form in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder.
(ii) Neither the Company nor any subsidiary of the Company is an
investment company subject to registration under the Investment Company
Act of 1940, as amended.
(C) the opinion of Roan & Xxxxxx, special insurance regulatory
counsel for the Company, addressed to the Underwriters and dated the Closing
Date (and any settlement date pursuant to Section 3(b) hereof), or other
------------
evidence satisfactory to the Representative to the effect that:
The description of the Company's and its Subsidiaries
experiences with respect to the Texas
11
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Insurance Department's Orders of Administrative Oversight set forth under
"Risk Factors--Regulation" in the Prospectus, is accurate in all material
respects.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus (except as and to the extent stated in subparagraphs (v) and (xiv)
above), on the basis of the foregoing and on such counsel's participation in
the preparation of the Registration Statement and the Prospectus, nothing has
come to the attention of such counsel that causes such counsel to believe that
the Registration Statement, at the Effective Date and at the Closing Date (and
any settlement date pursuant to Section 3(b) hereof), contained or contains
------------
any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, at the date of such
Prospectus or at the Closing Date (or any settlement date pursuant to Section
-------
3(b) hereof), contained or contains any untrue statement of a material fact or
----
omitted or omits to state a 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 (it being understood that such
counsel need express no comment with respect to the Consolidated Financial
Statements and schedules and other financial or statistical data included in
the Registration Statement or Prospectus).
References to the Prospectus in this Section 6(b) shall include any
------------
supplements thereto.
(c) The Representative shall have received from Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C., counsel for the Underwriters, an opinion dated the Closing Date
(and any settlement date pursuant to Section 3(b) hereof), with respect to the
------------
issuance and sale of the Securities, and with respect to the Registration
Statement, the Prospectus and other related matters as the Representative may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters.
(d) The Company shall have furnished to the Representative a certificate
of the Company, signed by its Chief Executive Officer and Chief Financial
Officer, dated the Closing Date (and any settlement date pursuant to Section
-------
3(b) hereof), to the effect that each has carefully examined the Registration
----
Statement, the Prospectus (and any supplements thereto) and this Agreement,
and, after due inquiry, that:
(i) As of the Closing Date (and any settlement date pursuant to
Section 3(b) hereof), the statements made in the Registration Statement
------------
and the Prospectus are true and correct and the Registration Statement
and the Prospectus do 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, in the light of the
circumstances under which they were made, not misleading.
(ii) No order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Securities under
the securities or Blue Sky laws of any jurisdiction is in effect and no
proceeding for such purpose is pending before or, to the knowledge of
such officers, threatened or contemplated by the Commission or the
authorities of any such jurisdiction; and any request for additional
information with respect to the Registration Statement or the Prospectus
on the part of the staff of the Commission or any such authorities
brought to the attention of such officers has been complied with to the
satisfaction of the staff of the Commission or such authorities.
(iii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (x) there has not
been any change in the capital stock or long-term debt of the Company,
except as set forth in or contemplated by the Registration Statement and
the Prospectus, (y) there has not been any material adverse change in the
general affairs, business, prospects, properties, management, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, whether or not arising from transactions in the ordinary
course of business, in each case, other than as set forth in or
contemplated by the Registration Statement and the Prospectus, and (z)
the Company has not sustained any material interference with its business
or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
set forth in the
12
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Registration Statement and the Prospectus.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has been no
litigation instituted against the Company, any of its respective officers
or directors, or, to the best knowledge of such officers, any affiliate
or promoter of the Company, and since such dates there has been no
proceeding instituted or, to the best knowledge of such officers,
threatened against the Company, any of its officers or directors, or, to
the best knowledge of such officers, any affiliate or promoter of the
Company, before any federal, state or county court, commission,
regulatory body, administrative agency or other governmental body,
domestic or foreign, in which litigation or proceeding an unfavorable
ruling, decision or finding could have a Material Adverse Effect.
(v) Each of the representations and warranties of the Company
in this Agreement is true and correct in all material respects on and as
of the Execution Time and the Closing Date (and any settlement date
pursuant to Section 3(b) hereof) with the same effect as if made on and
------------
as of the Closing Date (and any settlement date pursuant to Section 3(b)
------------
hereof).
(vi) Each of the covenants required in this Agreement to be
performed by the Company on or prior to the Closing Date (and any
settlement date pursuant to Section 3(b) hereof) has been duly, timely
------------
and fully performed, and each condition required herein to be complied
with by the Company on or prior to the Closing Date (and any settlement
date pursuant to Section 3(b) hereof) has been duly, timely and fully
------------
complied with.
(e) At the Execution Time and on the Closing Date (and any settlement
date pursuant to Section 3(b) hereof), Xxxxxxx, Xxxxxxx & Company, P.C., with
------------
respect to the Company, shall have furnished to the Representative letters,
dated as of such dates, in form and substance satisfactory to the
Representative, confirming that they are independent accountants within the
meaning of the Act and the applicable rules and regulations thereunder and
stating, with respect to the Company, in effect that:
(i) In their opinion, the audited Consolidated Financial
Statements of the Company for the fiscal year ended December 31, 1997,
and the notes to the Consolidated Financial Statements and Financial
Statement schedules for those periods included in the Registration
Statement and the Prospectus, including, without limitation, transactions
with unconsolidated Subsidiaries, comply in all material respects with
generally accepted accounting principles and the applicable accounting
requirements of the Act and the applicable rules and regulations
thereunder.
(ii) On the basis of a reading of the latest unaudited
Consolidated Financial Statements made available by the Company, carrying
out certain specified procedures (but not an examination in accordance
with generally accepted auditing standards), a reading of the minutes of
the meetings of the shareholders, directors and committees of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company,
nothing came to their attention that caused them to believe that with
respect to the period subsequent to December 31, 1997 through a specified
date not more than five business days prior to the date of the letter,
(y) there were any changes in the long-term debt or capital stock of the
Company, or decreases in net current assets, net assets or shareholder's
equity of the Company as compared with the amounts shown on the December
31, 1997 balance sheet included in the Registration Statement and the
Prospectus or (z) there were any decreases in reserves, sales, net income
or income from operations, of the Company, as compared with the
corresponding period in the preceding year, except for changes or
decreases which the Registration Statement discloses have occurred or may
occur and except for changes or decreases, set forth in such letter, in
which case (A) the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation is not
deemed necessary by the Representative and (B) such changes or decreases
and the explanation thereof shall be acceptable to the Representative, in
its sole discretion.
(iii) They have performed certain other specified procedures as
a result of which they determined that all information of an accounting,
financial or statistical nature (which is limited to accounting,
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14
financial or statistical information derived from the general accounting
records of the Company) set forth in the Registration Statement and the
Prospectus and specified by you prior to the Execution Time, agrees with
the accounting records of the Company.
References to the Prospectus in this Section 6(e) shall include
------------
any supplements thereto.
(f) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have been
(i) any changes or decreases from that specified in the letters referred to in
Section 6(e) hereof or (ii) any change, or any development involving a
------------
prospective change, in or affecting the properties, assets, results of
operations, business, capitalization, net worth, prospects, general affairs or
condition (financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, the effect of which is, in the sole judgment of the
Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or delivery of the Securities
as contemplated by the Registration Statement and the Prospectus.
(g) On or prior to the Effective Date, the Securities (other than the
Warrant Securities) shall have been approved for listing on Pacific Exchange,
subject to official notice of issuance.
(h) The Company shall not have sustained any uninsured substantial loss
as a result of fire, flood, accident or other calamity.
(i) The Company shall have furnished to the Representative a certificate
of the Secretary of the Company certifying as to certain information and other
matters as the Representative may reasonably request.
(j) The Company shall have furnished to the Representative such further
information, certificates and documents as the Representative may reasonably
request.
If any of the conditions specified in this Section 6 shall not have been
---------
fulfilled in any respect when and as provided in this Agreement, or if any of
the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all respects reasonably satisfactory in form and substance to
the Representative and its counsel, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the
Closing Date (or any settlement date pursuant to Section 3(b) hereof), by the
------------
Representative. Notice of such cancellation shall be given to the Company in
writing or by telephone, facsimile or telegraph confirmed in writing.
7. FEES AND EXPENSES AND UNDERWRITERS' WARRANT. The Company agrees to pay or
cause to be paid the following:
(a) the fees, disbursements and expenses of its own counsel and
accountants in connection with the registration of the Securities under the
Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus, any
Prospectus, and any drafts thereof, and amendments and supplements thereto,
and the mailing and delivery of copies thereof to the Underwriters and
dealers;
(b) all filing and other fees in connection with filing with the NASD,
and complying with applicable review requirements thereof;
(c) the cost of preparing and printing certificates for the Securities;
(d) all expenses, taxes, fees and commissions, including, without
limitation, any and all fixed transfer duties sellers' and buyers' stamp taxes
or duties on the purchase and sale of the Securities and stock exchange
brokerage and transaction levies with respect to the purchase and, if
applicable, the sale of the Securities (the latter to the extent paid and not
reimbursed) (i) incident to the sale and delivery by the Company of the
Securities to the Underwriters and (ii) incident to the sale and delivery of
the Securities by the Underwriters to the initial purchasers thereof;
(e) the costs and charges of any transfer agent and registrar;
(f) the fees and expenses in connection with qualification of the
Securities (other than the Warrant Securities) for listing on the Pacific
Exchange;
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(g) a nonaccountable expense allowance of 2.0% of the proceeds derived
from the offering (including the Option Securities described in Section 2(b)
------------
hereof) payable to the Representative, of which $50,000 has been paid prior to
the date hereof; and
(h) all other costs and expenses incident to the performance of the
Company's obligations hereunder which are not otherwise specifically provided
for in this Section 7.
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In addition to the sums payable to the Representative as provided
elsewhere herein and in addition to the Underwriters' Option, the Underwriters
shall be entitled to receive, as partial compensation for their services,
warrants (the "Underwriters' Warrants") for the purchase of an aggregate of
65,000 shares of Common Stock of the Company. The Underwriters' Warrants
shall be issued pursuant to a Warrant Agreement in the form of Exhibit A
---------
attached hereto and shall be exercisable, in whole or in part, for a period of
four years commencing from the one year anniversary of the date hereof, at
120% of the initial public offering price per share of Common Stock. The
Underwriters' Warrants, shall be non-transferable for one year from the date
of issuance of the Underwriters' Warrants, except for (i) transfers to
officers or partners of the Underwriters, (ii) in connection with a merger,
consolidation or reorganization of the Company or (iii) transfers occurring by
operation of law.
Without limiting in any respect the foregoing obligations of the Company,
which obligations shall survive any termination of this Agreement, if the sale
of the Securities provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section 6 hereof is not
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satisfied, because of any termination pursuant to Section 10 hereof, or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company agrees to
reimburse the Underwriters, upon demand, for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
actually and reasonably incurred by them in connection with the proposed
purchase and sale of the Securities to the extent the amounts paid pursuant to
Section 7(g) hereof are insufficient therefor.
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8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
(i) Section 1 of this Agreement, the Registration Statement, any Preliminary
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Prospectus or the Prospectus, or in any amendment thereof or supplement
thereto, or (ii) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or Blue Sky laws thereof or filed
with the Commission or any securities association or securities exchange, 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, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representative
specifically for use in the Registration Statement or Prospectus; provided
further, that with respect to any untrue statement or omission, or any alleged
untrue statement or omission, made in any Preliminary Prospectus, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling any
such Underwriter) from whom the person asserting any such losses, claims,
damages, liabilities or expenses purchased the Securities concerned to the
extent that such untrue statement or omission, or alleged untrue statement or
omission, has been corrected in the Prospectus and the failure to deliver the
Prospectus was not a result of the Company's failure to comply with its
obligations under Section 5(d) hereof. The indemnity agreement will be in
------------
addition to any liability which the Company may otherwise have. The Company
will not, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or
any person who controls such Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act is a party to
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such claim, action, suit or proceeding), unless the settlement or compromise
or consent includes an unconditional release of such Underwriter and each such
controlling person from all liability arising out of such claim, action, suit
or proceeding, reasonably satisfactory in form and substance to the
Representative.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of the Act or the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Company by
or on behalf of such Underwriter through the Representative specifically for
use in the Registration Statement or Prospectus. The Company acknowledges that
the corporate names of the Underwriters, the stabilization legend on page 2
and the information under the heading "Underwriting" in the Prospectus and in
any Preliminary Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters. The obligations of each
Underwriter under this subsection (b) shall be in addition to any liability
which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
---------
of notice of the commencement of any action, suit or proceeding, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party in
---------
writing of the commencement thereof and the indemnifying party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all expenses; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party, unless such omission
results in the forfeiture of substantive rights or defenses by the
indemnifying party. All such expenses shall be paid by the indemnifying party
as incurred by an indemnified party. Any such indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party has agreed
to pay such fees and expenses or (ii) the indemnifying party shall have failed
promptly after notice by such indemnified party to assume the defense of such
action or proceeding and employ counsel reasonably satisfactory to the
indemnified party in any such action, suit or proceeding or (iii) the named
parties in any such action or proceeding (including any impleaded parties)
include both such indemnified party and the indemnifying party, and such
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to such indemnified party which are different
from or additional to those available to the indemnifying party (in which
case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense
of such action or proceeding on behalf of the indemnified party or parties, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties, which firm shall be designated in writing to the
indemnifying party). Any such fees and expenses payable by the indemnifying
party shall be paid to or on behalf of the indemnified party entitled thereto
as incurred. An indemnifying party shall not be liable for any settlement of
any action or claim effected without its consent, which consent shall not be
unreasonably withheld.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 8(a) or
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8(b) is applicable in accordance with its terms but is for any reason held by
----
a court to be unavailable from the indemnifying party on grounds of policy or
otherwise, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to
which the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible in the aggregate for that
portion represented by the total underwriting compensation in respect of the
Securities bears to the public offering price appearing thereon and the
Company is responsible for the balance; provided, however, that (i) in no case
shall any Underwriter (except as may be provided in the Agreement Among
Underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the total underwriting compensation applicable to the
Securities to be purchased by such Underwriter hereunder and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 8, each
---------
person who controls an Underwriter within the meaning of the Act shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of the Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to clause (ii) of this Section 8(d). Any party entitled to
------------
contribution will, promptly
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after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section 8(d), notify such party or
------------
parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the number of Underwritten
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate number of Underwritten Securities set forth opposite the names of
all the remaining Underwriters) the Underwritten Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that if the aggregate number of Underwritten Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate number of Underwritten Securities set forth
in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of such
Underwritten Securities, and if such nondefaulting Underwriters do not
purchase all of such Underwritten Securities, this Agreement will terminate
without liability to any non-defaulting Underwriter or the Company except as
otherwise provided in Section 7. In the event of a default by any Underwriter
---------
as set forth in this Section 9, the Closing Date shall be postponed for such
---------
period, not exceeding seven days, as the Representative shall determine in
order that the required changes in the Registration Statement and the
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company or any nondefaulting Underwriter for damages
occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (a)
a suspension or material limitation in trading in securities generally on the
New York or American Stock Exchange, the Nasdaq National Market or any
relevant over-the-counter market, the Chicago Board Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade shall have occurred,
(b) a banking moratorium shall have been declared by federal, New York or
California state authorities, (c) the United States shall have engaged in
hostilities which shall have resulted in the declaration, on or after the date
hereof, of a national emergency or war, or (d) a change in national or
international political, financial or economic conditions or national or
international equity markets or currency exchange rates shall have occurred,
if the effect of any such event specified above is, in the sole judgment of
the Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or delivery of the Securities
as contemplated by the Registration Statement and the Prospectus.
11. REPRESENTATIONS and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company,
its officers and the Underwriters set forth in, referred to in, or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or
any of the officers, directors or controlling persons referred to in Section 8
---------
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
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cancellation of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and effective
only on receipt, and shall be mailed, delivered, telegraphed or sent by
facsimile transmission and confirmed:
To the Representative at:
Tejas Securities Group, Inc.
0000 Xxxxxxx xx Xxxxx Xxx. South Building Two, Suite 500
Austin, Texas 78746
Attention: Xxxxxx X. Xxxxx, III
Facsimile No. (000) 000-0000
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With copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 0000-0000
Attention: Xxxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
To the Company at:
Lincoln Heritage Corporation
0000 Xxxxxxx xx Xxxxx Xxx. South Building Three, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
With copy to:
Xxxxxxxx Xxxxxx
One Mercantile Center
St. Louis, MO 63101
Attention: Xxxxxx X. Xxxx
Facsimile No. (000) 000-0000
and
Wittner, Poger, Xxxxxxxxx, Spewak and Maylack, P.C.
0000 Xxxxxxxx Xxx., Xxxxx 000
Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
13. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
directors and controlling persons referred to in Section 8 hereof, and no
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other person will have any right or obligation hereunder.
14. COUNTERPARTS. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereon and hereon were on the same instrument.
15. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas, without regard to its conflict
of law principles.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Lincoln Heritage Corporation
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By:_________________________________________
Xxxxxxx Xxxxxxxx
Executive Vice President--Actuarial
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
TEJAS SECURITIES GROUP, INC.
By:__________________________
Xxxxxx X. Xxxxx, III
For itself and the other several Underwriters in Schedule I to the foregoing
Agreement.
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SCHEDULE I
NUMBER OF
UNDERWRITTEN SECURITIES
UNDERWRITERS TO BE PURCHASED
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Tejas Securities Group, Inc.
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TOTAL 650,000
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EXHIBIT A
FORM OF WARRANT AGREEMENT
