1
1,000,000 Shares
LINCOLN HERITAGE CORPORATION
Common Stock
June , 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 1,000,000 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 150,000
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additional 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
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as so 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.
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 a related preliminary
prospectus ("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.
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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, and June
----, 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 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
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pursuant to Section 3(b) hereof, there will be, no other classes of stock
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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 Registration Statement, there are, and, on the Closing Date
and any settlement date pursuant to Section 3(b) hereof, there will be, no
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options, warrant 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 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
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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 American Stock Exchange ("AMEX"), 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.
(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.
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(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 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
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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 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.
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(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 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 also be furnished to the
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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 1,000,000 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 150,000 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
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Option 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 [June] --,
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
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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 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.
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(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 caption "Use of Proceeds" in the
Prospectus.
(g) The Company will (i) cause the Securities (other than the Warrant
Securities) to be listed on AMEX and (ii) comply with all registration,
filing and reporting requirements of the Exchange Act and AMEX 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,
AMEX 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.
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(b) The Company shall have furnished to the Representative:
(A) the opinion of Wittner, Xxxxx, Xxxxxxxxx, Kessler, 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. 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 AMEX 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 Incorporation, as amended,
(or other charter document) or bylaws of the Company or any Subsidiary, or
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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 Insurance Department's Orders of
Administrative Oversight set forth under -------- 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
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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 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.
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(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, and Ernst & Young LLP, with respect to Harbourton,
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 or Harbourton, as the case may be, in effect that:
(i) In their opinion, the audited Consolidated Financial
Statements of the Company or Harbourton 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 or
Harbourton, 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 or Harbourton who have responsibility for financial and
accounting matters of the Company or Harbourton, 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
Harbourton, or decreases in net current assets, net assets or
shareholder's equity of the Company or Harbourton 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 or Harbourton, 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 or
Harbourton 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,
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 AMEX, subject to
official notice of issuance.
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(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 AMEX;
(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.
---------
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 100,000 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 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
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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.
------------
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 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 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
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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
------------
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 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.
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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 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
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:
Wittner, Poger, Xxxxxxxxx, Xxxxxxx, Spewak and Maylack, P.C.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
and
Xxxxxxxx Xxxxxx
One Mercantile Center
St. Louis, MO 63101
Attention: Xxxxxx X. Xxxx
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
---------
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.
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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
By:
----------------------------------------------
Xxxxxxxx X. Xxxxxxx
President and Chief Executive Officer
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
------------ ---------------
Tejas Securities Group, Inc.
---------
Total 1,000,000
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