EXHIBIT 1.01
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SURETY CAPITAL CORPORATION
1,500,000 Shares*
Common Stock
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Underwriting Agreement
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February , 1998
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*Plus an option to purchase from the Company up to 225,000 additional shares to
cover over allotments.
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SURETY CAPITAL CORPORATION
1,500,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
February __, 1998
Xxxxxx & Xxxxxx Incorporated
As Representative of the Several
Underwriters Named in Schedule I
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Surety Capital Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell 1,500,000 shares ("Firm
Shares") of its authorized but unissued Common Stock, par value $.01 per share
("Common Stock"), to the several underwriters named in Schedule I as it may be
amended by the Pricing Agreement hereinafter defined ("Underwriters"), who are
acting severally and not jointly. In addition, the Company proposes to grant to
the Underwriters an option to purchase up to 225,000 additional shares of Common
Stock ("Additional Shares") as provided in Section 4 hereof. The Firm Shares,
and to the extent such option is exercised, the Additional Shares, are
hereinafter collectively referred to as the "Shares."
You have advised the Company that the Underwriters propose to make a public
offering of their respective portions of the Shares as soon as you deem
advisable after the registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the Pricing Agreement
hereinafter defined has been executed and delivered.
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* Plus an option to acquire up to 225000 additional shares to cover over
allotments.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company and the Representative, acting on behalf of the
several Underwriters, shall enter into a pricing agreement substantially in the
form of Exhibit A hereto ("Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
between the Company and the Representative and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares
will be governed by this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of the Pricing Agreement,
this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company hereby confirms its agreements with respect to the purchase of
the Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 33-_________) and a
related preliminary prospectus with respect to the Shares have been prepared and
filed with the Securities and Exchange Commission ("Commission") by the Company
and in conformity with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "1933 Act"; all references herein to specific rules are rules
promulgated under the 0000 Xxx); and the Company has so prepared and has filed
such amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof. In the event that the Company
determines to rely upon Rule 430A, the Company will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. There have been or will
promptly be delivered to you two signed copies of such registration statement
and amendments, including the exhibits filed therewith, and such number of
conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and final
forms of prospectus as the Underwriters may reasonably request.
The registration statement and prospectus, as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), are hereinafter
called the "Registration Statement" and the "Prospectus", respectively, except
that if the prospectus filed by the Company pursuant to Rule 424(b) differs from
the prospectus on file at the time the Registration Statement became or becomes
effective, the term "Prospectus" shall refer to the Rule 424(b) prospectus from
and after the time it is filed with the Commission or transmitted to the
Commission for filing. The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder are hereinafter collectively
referred to as the "Exchange Act."
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(b) The Commission has not issued any order preventing or suspending the
use of any preliminary prospectus, and each preliminary prospectus has conformed
in all material respects with the requirements of the 1933 Act and, as of its
date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. When the Registration
Statement became or becomes effective, and at the First Closing Date and the
Second Closing Date hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), and the
Prospectus and any amendments or supplements thereto, in all material respects
conformed or will in all material respects conform to the requirements of the
1933 Act, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, included or will include any untrue statement
of a material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representation or warranty as to
information contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation thereof.
(c) The Company and each of its subsidiaries, and TexStar Xxxxxxxx Xxxx,
Xxxxxxxxx Xxxx, Xxxxx, a national banking association ("TexStar"), have been
duly incorporated and are validly existing as corporations or banks in good
standing under the laws of their respective jurisdictions of incorporation, with
full power and authority to own or lease their properties and conduct their
businesses as described in the Prospectus; the Company's only subsidiaries are
those listed on Exhibit 21 of the Registration Statement; TexStar has no
subsidiaries; the Company and each of its subsidiaries, and TexStar, are duly
qualified to do business as foreign corporations under the corporation law of,
and are in good standing as such in, each jurisdiction in which they own or
lease substantial properties, have an office, or in which substantial business
is conducted and such qualification is required except in any such case where
the failure to so qualify or be in good standing would not have a material
adverse effect upon the condition (financial or otherwise), earnings, affairs,
business or prospects of the Company and its subsidiaries, or TexStar, as the
case may be, taken as a whole ("Material Adverse Effect"); and no proceeding of
which the Company has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification. Surety Bank, National Association, a
subsidiary of the Company ("Surety Bank") and TexStar are sometimes collectively
referred to herein as the "Banks."
(d) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus under "Capitalization" and the Shares conform in all
material respects to the description thereof contained in the Prospectus. All
of the issued and outstanding
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body having jurisdiction over the Company or any subsidiary or any of their
respective properties, or any order of any court or governmental agency or other
regulatory authority entered in any proceeding to which the Company or any
subsidiary was or is now a party or by which it is bound. No consent, approval,
authorization or other order of or filing with, any court, regulatory body,
administrative agency or other governmental shares of Common Stock have been
duly authorized, validly issued and are fully paid and non-assessable and free
of preemptive or other similar rights and there are no options, agreements,
contracts or other rights in existence to acquire from the Company any shares of
Common Stock, except as set forth in the Prospectus. Except as set forth in the
Prospectus, there are no holders of the securities of the Company having rights
to the registration thereof. The Company has no banking subsidiaries other than
Surety Bank and TexStar has no banking or other subsidiaries. All of the capital
stock of each subsidiary of the Company, other than Surety Bank, has been duly
authorized, validly issued and is fully paid and non-assessable. All of the
outstanding capital stock of each of the Banks has been duly authorized, validly
issued and is fully paid and, subject to 12 U.S.C. (S) 55 (1982), nonassessable.
Each of the Company and TexStar, directly or indirectly, owns of record and
beneficially, free and clear of any liens, claims, encumbrances or rights of
others, all of the issued and outstanding shares of each of its respective
subsidiaries, except as referred to in the Prospectus. There are no options,
agreements, contracts or other rights in existence to purchase or acquire from
the Company or its subsidiaries, or TexStar, any issued and outstanding shares
of the capital stock of such subsidiaries.
(e) The Shares to be sold by the Company pursuant to this Agreement
and the Pricing Agreement have been duly authorized and, when issued and paid
for in accordance with this Agreement and the Pricing Agreement, will be validly
issued, fully paid and non-assessable; the Shares are not subject to the
preemptive rights of any shareholder of the Company; the holders of the Shares
will not be subject to personal liability by reason of being such holders; and
all corporate actions required to be taken for the authorization, issue and sale
of the Shares have been validly and sufficiently taken.
(f) The execution, delivery and performance by the Company of this
Agreement and the Pricing Agreement have been duly authorized by all necessary
corporate action on the part of the Company and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or bylaws (as
amended) and do not and will not constitute or result in the breach of, or be in
violation of, any of the terms or provisions of or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or its subsidiaries under any material
agreement, franchise, license, indenture, lease, mortgage, deed of trust, or
other instrument to which the Company or any subsidiary is a party or by which
the Company, any subsidiary or the property of any of them may be bound or
affected, or any law, order, judgment, decree, rule or regulation applicable to
the Company or any subsidiary of any government, governmental instrumentality,
court or regulatory body, administrative agency, or other governmental
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body is legally required for the execution and delivery of this Agreement or the
Pricing Agreement by the Company or the consummation by the Company of the
transactions contemplated herein or therein, except as may be required under or
by the 1933 Act, the American Stock Exchange, Inc. or the blue sky laws of the
various jurisdictions. This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms except insofar as (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to creditors' rights generally; (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding thereafter may be brought; and (iii) such enforcement may be
subject to any limitations under applicable law which relate to the
indemnification and contribution provisions of this Agreement.
(g) Each of Coopers & Xxxxxxx LLP and Xxxxxxxx & Rishebarger, who have
expressed their opinion with respect to certain of the financial statements
included in the Registration Statement, are independent accountants within the
meaning of the 1933 Act.
(h) The consolidated financial statements, together with the notes
thereto, of the Company and TexStar included in the Registration Statement
comply in all material respects with the 1933 Act and present fairly the
consolidated financial position of the Company and TexStar, respectively, as of
the respective dates of such financial statements (including, without
limitation, the allowance for possible loan losses), and the consolidated
results of operations and cash flows of the Company and TexStar for the
respective periods covered thereby, are in conformity with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed in the Prospectus; and the supporting schedules included in
the Registration Statement present fairly the information required to be stated
therein. No other financial statements are required to be included in the
Registration Statement. The consolidated financial, statistical and numerical
information with respect to the Company and its subsidiaries, and the financial
and statistical information with respect to Surety Bank, set forth in the
Prospectus are fairly presented, were derived from the consolidated financial
statements or the books and records of the Company and its subsidiaries and are
prepared on a basis consistent with the audited financial statements of the
Company.
(i) The pro forma financial information of the Company and its
subsidiaries included in the Registration Statement presents fairly the
information shown therein; has been compiled on a basis consistent with that of
the audited consolidated financial statements of the Company and its
subsidiaries and of TexStar included in the Registration Statement; has been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements; and the assumptions used in the preparation
thereof are reasonable.
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(j) Neither the Company nor any subsidiary thereof or TexStar, is in
violation of its articles of incorporation, articles of association, or bylaws,
in each case as amended, or in default under any consent decree, formal
agreement, memorandum of understanding or similar agreement, or in default with
respect to any provision of any lease, loan agreement, franchise, license,
permit or other contractual obligation to which it is a party or by which it or
any of its properties may be bound; there does not exist any state of facts
which constitutes an event of default by the Company as defined in such
documents or which, with notice or lapse of time or both, would constitute such
an event of default, except for any such violation or default of the articles of
incorporation, articles of association, bylaws, consent decrees, formal
agreements, memoranda of understanding or similar agreements, or any lease, loan
agreement, franchise, license, permit or other contractual obligations referred
to in this subparagraph (j) which, either individually or in the aggregate,
would not have a Material Adverse Effect.
(k) Except as disclosed in the Prospectus, (A) there is no action,
suit or proceeding before or by any court or governmental or regulatory agency
or body, domestic or foreign, or any arbitrator or arbitration panel, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries, or TexStar or any of its subsidiaries,
including without limitation proceedings relating to discrimination or
environmental matters, which could result in a Material Adverse Effect, and (B)
there is no decree, judgment, order, formal agreement or memorandum of
understanding of any kind in existence applicable to the Company or any of its
subsidiaries, or TexStar or any of its subsidiaries, or any of their respective
officers, employees or directors, requiring or restraining the taking of any
actions of any kind in connection with the business of the Company and its
subsidiaries or TexStar or its subsidiaries, respectively.
(l) The Company is a bank holding company duly registered with the
Board of Governors of the Federal Reserve System ("Federal Reserve Board") under
the Bank Holding Company Act of 1956, as amended ("BHCA"). Each Bank is a
national bank duly chartered and organized by authority of the Office of the
Comptroller of the Currency ("OCC"). The deposit accounts of each Bank are
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by such Bank. Since January 1,
1993, the Company and each Bank has filed all material reports and amendments
thereto that they were required to file with the Federal Reserve Board, the OCC
and any other federal or state regulatory authorities. Except as set forth in
the Prospectus, there is no unresolved material violation, criticism or
exception by any governmental or regulatory agency with respect to any report or
statement relating to any examinations of the Company or any of its
subsidiaries. The conduct of the business of the Company and each of its
subsidiaries is in compliance in all respects with applicable federal, state,
local and foreign laws and regulations, and all formal agreements, memoranda of
understanding and similar agreements with regulatory authorities, except where
the failure to be in compliance
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would not have a Material Adverse Effect. Each of the Company and its
subsidiaries, and TexStar, own or possess or have obtained all governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to lease or own, as the case may be, and to operate their properties
and to carry on their businesses as presently conducted except where the failure
to have any such governmental licenses, permits, consents, orders, approvals and
other authorizations would not have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries, nor TexStar, has received any written
notice of proceedings related to revocation or modification of any such
licenses, permits, consents, orders, approvals or authorizations which singly or
in the aggregate, if the subject of an unfavorable ruling or finding, would
result in a Material Adverse Effect. Except as disclosed in the Prospectus, none
of the Company, TexStar or the Banks is currently a party or subject to any
agreement or memorandum with, or directive or order issued by, the Federal
Reserve Board, the OCC or any other federal or state regulatory authorities,
which imposes any material restrictions or requirements not generally applicable
to bank holding companies or commercial banks.
(m) Each of the Company and its subsidiaries, and TexStar, have valid
and indefeasible title to all of the properties and assets reflected as owned by
them in the financial statements hereinabove described (or described elsewhere
in the Prospectus), subject to no lien, mortgage, pledge, charge, encumbrance or
title defect of any kind except those, if any, reflected in such financial
statements (or described elsewhere in the Prospectus) or which are not material
to the Company and its subsidiaries, or TexStar, as the case may be, taken as a
whole. Each of the Company and its subsidiaries, and each of TexStar and its
subsidiaries, hold their respective leased properties that are material to the
Company and its subsidiaries, or TexStar, respectively, taken as a whole under
valid and binding leases.
(n) None of the Company or its subsidiaries has taken, and none will
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (i) any material adverse change in the
condition (financial or otherwise), earnings, affairs, business or prospects of
the Company or its subsidiaries, or of the earnings, affairs, business or
prospects of TexStar, whether or not arising in the ordinary course of
business, (ii) any material transaction entered into, or any material liability
or obligation incurred, by the Company or its subsidiaries or by TexStar other
than in the ordinary course of business, (iii) any change in the capital stock,
or increase in the short-term debt or long-term debt of the Company or its
subsidiaries or of TexStar, or (iv) any dividend
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or distribution of any kind declared, paid or made by the Company or TexStar in
respect of its capital stock.
(p) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the 1933 Act which have not been described or filed as required.
The contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor any of the subsidiaries, nor to the
knowledge of the Company, any other party, is in breach of or default under any
of such contracts.
(q) The Company together with its subsidiaries, and TexStar, own and
possess sufficient right, title and interest in and to, or has duly licensed
from third parties the right to use, all trademarks, trade names, copyrights and
other proprietary rights ("Trade Rights") material to the business of the
Company and each of its subsidiaries, or TexStar and its subsidiaries, in each
case taken as a whole. None of the Company or any of its subsidiaries or
TexStar has received any written notice of infringement, misappropriation or
conflict from any third party as to such material Trade Rights which has not
been resolved or disposed of, and none of the Company or any of its
subsidiaries, or TexStar, has infringed, misappropriated or otherwise conflicted
with material Trade Rights of any third parties, which infringement,
misappropriation or conflict would have a Material Adverse Effect.
(r) All offers and sales of equity securities prior to the date hereof
by the Company or any of its subsidiaries were at all relevant times either
exempt from the registration requirements of the 1933 Act and the registration
requirements of all applicable state securities or blue sky laws, or were duly
registered in accordance with the provisions thereof.
(s) Each of the Company and its subsidiaries, and TexStar, has timely
filed all necessary federal and state income and franchise tax returns required
to be filed through the date hereof and have paid all taxes shown as due
thereon, and there is no tax deficiency that has been, or to the knowledge of
the Company might reasonably be expected to be, asserted against the Company or
any of its subsidiaries or any of their properties or assets, or against TexStar
or any of its subsidiaries or any of their properties or assets, that could
reasonably be expected to have a Material Adverse Effect.
(t) The Company's Common Stock is registered pursuant to Section 12(b)
of the Exchange Act, and listed for trading on the American Stock Exchange, Inc.
("Amex"). The Company has filed an additional listing application with the Amex
with respect to the Primary Shares, and has received notification from the Amex
that the listing of the Primary Shares has been approved, subject to notice of
issuance or sale thereof.
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(u) Neither the Company nor any of its subsidiaries (and neither
TexStar nor any of its subsidiaries) is, and neither the Company nor any of its
subsidiaries intends to conduct its business in a manner in which it would
become, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(v) No labor dispute with the employees of the Company or any of its
subsidiaries, or with the employees of TexStar and its subsidiaries, is pending
or, to the knowledge of the Company, threatened that could reasonably be
expected to have a Material Adverse Effect. Each employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for which the Company or any subsidiary acts as sponsor within the
meaning of ERISA is and has been in all material respects operated and
administered in accordance with the provisions of ERISA and applicable law. The
present value of all benefits vested under each employee benefit plan which is
subject to Title IV of ERISA did not exceed, as of the end of the most recent
plan year, the value of the assets of the plan allocable to such vested or
accrued benefits, and no such plan or any trust created thereunder has incurred
any "accumulated funding deficiency" within the meaning of the Internal Revenue
Code ("Code") since the effective date of ERISA. No employee benefit plan or any
trust created thereunder or any trustee fiduciary or administrator thereof has
engaged in a "prohibited transaction" within the meaning of the Code or ERISA or
violated any of the fiduciary standards of ERISA, and there has been no
"reportable event" within the meaning of ERISA with respect to any such plan.
Neither TexStar nor its subsidiary maintains an employee benefit plan within the
meaning of ERISA.
(w) Each of the Company and its subsidiaries, and, to the knowledge of
the Company, each of TexStar, (A) makes and keeps books, records and accounts
which, in reasonable detail and in all material respects, accurately and fairly
reflect its transactions and dispositions of its assets and (B) maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with management's
general or specific authorizations, (2) transactions are recorded as necessary
(i) to permit the preparation of financial statements in conformity with
generally accepted accounting principles consistently applied or any other
criteria applicable to such statements and (ii) to maintain accountability for
assets, (3) access to assets is permitted only in accordance with management's
general or specific authorizations and (4) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(x) Except as disclosed in the Prospectus, (A) none of the Company,
TexStar or any of their respective subsidiaries is presently engaged in
negotiations for the acquisition of all or a portion of the stock or other
equity interest or all or a portion of the assets of any person (including
without limitation any company, corporation, partnership, limited liability
company, partnership, joint venture or sole proprietorship), and (B) has no
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agreements or understandings with respect to the acquisition of all or a portion
of the stock or other equity interest or all or portion of the assets of any
specific person.
(y) Except as disclosed in the Prospectus, as of the date of the
Prospectus and as of each Closing Date, (A) no extension of credit made by
either Bank to an executive officer, director, or affiliate of the Company or
either of the Banks is (1) delinquent, past due, on non-accrual status or non-
performing, (2) identified as a potential problem loan on any internal "watch
list" or (3) constitutes a restructured loan; and (B) all extensions of credit
to any director or executive officer or any member of their immediate family (1)
were made in the ordinary course of business, (2) were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and (3) did not involve
more than the normal risk of collectibility or present other unfavorable
features.
(z) That certain Reorganization Agreement dated October 10, 1997
among TexStar, the certain shareholders of TexStar (for certain limited
purposes) and the Company covering the transactions between the Company and
TexStar described in the Prospectus under the caption "The TexStar Acquisition
-- The Reorganization Agreement" and the transactions contemplated thereby have
been authorized by all necessary corporate action on the part of the Company,
been executed and delivered by the Company and the other parties thereto and
constitute a valid and binding obligation of the Company (assuming the due
authorization, execution and delivery thereof by the other parties thereto)
enforceable against the Company in accordance with its terms, except insofar as
(i) such agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws relating to creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding thereafter may be brought.
(aa) The Company intends to apply the net proceeds from the sale of
the Shares for the purposes set forth in the Prospectus under the caption "Use
of Proceeds."
(bb) Since January 1, 1993 the Company has, and at each Closing Date
the Company will have, made all filings required to be made by it under the
Exchange Act; and all such filings conformed and will conform in all material
respects to the requirements of the Exchange Act, and none of such filings
contained an untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in lieu of the circumstances under which they were made, not misleading.
SECTION 3. Representation and Warranty of the Underwriters. The
Representative, on behalf of the several Underwriters, represents and warrants
to the Company that the information set forth with respect to the Shares (a) on
the cover page of the Prospectus with respect to price, underwriting discounts
and commissions and terms of the offering and (b)
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under "Underwriting" in the Prospectus constitutes the only information
furnished to the Company by and on behalf of the Underwriter for use in
connection with the preparation of the Registration Statement and such
information is correct in all material respects.
SECTION 4. Purchase, Sale and Delivery of Shares. (a) On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
to the several Underwriters named in Schedule I hereto, and the Underwriters
agree, severally and not jointly, to purchase from the Company, the Firm
Shares. The purchase price per share to be paid by the Underwriters to the
Company shall be the price per share set forth in the Pricing Agreement.
Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of counsel to the
Representative (or such other place as may be agreed upon by the Company and the
Representative) at such time and date, not later than the third full business
day following the first date that any of the Common Shares are released by you
for sale to the public, as you shall designate by at least 48 hours prior notice
to the Company (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third full
business day following the first date that any of the Common Shares are released
by you for sale to the public or the date that is 48 hours after the date that
the Prospectus has been so recirculated.
Delivery of certificates for the Firm Shares shall be made by or on behalf
of the Company to you, against payment by you of the purchase price therefor by
certified or official bank checks payable in next day funds to the order of the
Company. The certificates for the Shares shall be registered in such names and
denominations as you shall have requested at least two full business days prior
to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
New York, New York, as may be designated by you. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
(b) In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase up to an aggregate of 225,000 Additional Shares, at the same purchase
price per share to be paid for the Firm Shares, for use solely in covering any
over allotments made by the Underwriters in the sale and distribution of the
Firm Shares. The option granted hereunder may be exercised at any time (but not
more than once), in whole or in part, within 30 days after the date of the final
Prospectus upon written notice by you to the Company setting forth the aggregate
number of Additional Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for such shares
are to be registered and the time and
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place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date, shall not be earlier than three nor later than ten full
business days after delivery of such notice of exercise. Certificates for the
Additional Shares will be made available at the Company's expense for checking
and packaging at 9:00 A.M., local time, on the first full business day preceding
the Second Closing Date at a location as may be designated by you. The manner of
payment for and delivery of the Additional Shares shall be the same as for the
Firm Shares as specified in Section 4(a).
(c) If the Company has elected not to rely upon Rule 430A, the initial
public offering price of the Shares and the purchase price per share to be paid
by the several Underwriters for the Shares shall have each been determined and
set forth in the Pricing Agreement, dated the date hereof, and an amendment to
the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(d) If the Company has elected to rely upon Rule 430A, the purchase price
per share to be paid by the several Underwriters for the Shares shall be an
amount equal to the initial public offering price, less an amount per share to
be determined by agreement between the Representative and the Company. The
initial public offering price per share of the Shares shall be a fixed price to
be determined by agreement between the Representative and the Company. The
initial public offering price per share and the purchase price, when so
determined, shall be set forth in the Pricing Agreement. In the event that such
prices have not been agreed upon and the Pricing Agreement has not been executed
and delivered by the parties thereto by the close of business on the second
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party, unless
otherwise agreed to by the Company and the Representative.
SECTION 5. Covenants of the Company. The Company covenants and agrees
with the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective. The Company will advise you promptly of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement (and make every reasonable effort to obtain the
withdrawal of such order as early as possible) or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, and will also advise you
promptly of any request of the Commission for amendment or supplement of the
Registration Statement, of any preliminary prospectus or of the Prospectus, or
for additional information, and will not file any amendment or supplement to the
Registration Statement, to any preliminary
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prospectus or to the Prospectus of which you have not been furnished with a copy
prior to such filing or to which you reasonably object.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act, any event occurs as a result of
which the Prospectus, including any amendments or supplements, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements thereto and including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Shares which differs from the prospectus on file with the Commission at the time
of effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with the
1933 Act, the Company promptly will advise you thereof and will promptly prepare
and, if required pursuant to Rule 424(b), file with the Commission an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(c) Neither the Company nor any of its subsidiaries will, prior to the
earlier of the Second Closing Date or termination or expiration of the related
option, incur any material liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, except as contemplated by the Prospectus.
(d) The Company will not declare or pay any dividend or make any other
distribution upon the Common Stock payable to shareholders of record on a date
prior to the earlier of the Second Closing Date or termination or expiration of
the related option, except as contemplated by the Prospectus.
(e) Not later than 90 days after the close of the period covered
thereby, the Company will make generally available to its security holders an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the 1933
Act and Rule 158 thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an underwriter or
dealer, the Company will furnish to you at its expense (and consents to the use
thereof), subject to the provisions of subsection (b) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the purposes
contemplated by the 1933 Act.
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(g) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the blue sky laws of such jurisdictions as
you designate, and will continue such qualifications in effect so long as
reasonably required for the distribution of the Shares. The Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not currently qualified
or where it would be subject to taxation as a foreign corporation.
(h) During the period of three years after the date of the Pricing
Agreement, the Company will furnish to the Representative a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company with
the Commission, the Amex, any other securities exchange or the NASD and (ii) as
soon as available, of each report of the Company mailed to any class of its
securityholders.
(i) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds."
(j) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule 430A,
then immediately following the execution and delivery of the Pricing Agreement,
the Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.
(k) The Company will comply with all of the provisions of each
undertaking contained in the Registration Statement.
(l) The Company will not, without the prior written consent of the
Representative, sell, contract to sell or otherwise dispose of any equity
security of the Company (including shares of Common Stock) for a period of 180
days after the effective date of the Registration Statement, other than (i)
Common Stock issued and sold to the Underwriters pursuant to this Agreement, and
(ii) Common Stock issued upon exercises of outstanding stock options granted
under the Company's 1988 Stock Option Plan or 1995 Stock Option Plan (as such
terms are defined in the Prospectus) in the aggregate not to exceed __________
shares of Common Stock. The Company will cause each of its executive officers
and directors to deliver to the Representative on or before the date of this
Agreement an agreement satisfactory in form and substance to the Representative
and its counsel, whereby each agrees, for a period of 180 days after the
effective date of the Registration Statement, not to offer, sell or otherwise
dispose of any shares of Common Stock without the prior written consent of the
Representative ("Lock-Up Letter").
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SECTION 6. Payment of Expenses. (a) The Company will pay, or reimburse if
paid by the Representative, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses incident
to the performance by the Company of its obligations under this Agreement and
the Pricing Agreement, including, without limiting the generality of the
foregoing, (i) preparation, printing, filing and distribution (including
postage, air freight charges and charges for counting and packaging) of the
Registration Statement, each preliminary prospectus, the Prospectus, each
amendment and/or supplement to any of the foregoing, and this Agreement, the
Pricing Agreement, the Agreement Among Underwriters and the Selected Dealers
Agreement; (ii) the furnishing to the several Underwriters and dealers of copies
of the foregoing materials (provided, however, that any such copies furnished by
the Company more than nine months after the first date upon which the Shares are
offered to the public shall be at the expense of the several Underwriters or
dealers so requesting as provided in paragraph 5(b) above); (iii) the
registrations or qualifications referred to in paragraph 5(g) above (including
reasonable fees and disbursements of counsel in connection therewith) and
expenses of printing and delivering to the several Underwriters copies of the
preliminary and final Blue Sky memoranda, provided that in no event shall the
Company be required to pay in excess of $15,000 with respect to the fees,
disbursements and expenses referred to in this clause (iii), exclusive of filing
fees; (iv) the review of the terms of the public offering of the Shares by the
NASD (including the filing fees paid to the NASD in connection therewith); (v)
the performance by the Company of its other obligations under this Agreement,
including the fees of the Company's counsel and accountants; (vi) the issuance
of the Shares and the preparation and printing of the stock certificates
representing the Shares including any stamp taxes payable in connection with the
original issuance of the Shares; and (vii) the furnishing to the Underwriter of
copies of all reports and information required by Section 5(h) above, including
costs of shipping and mailing.
(b) If the sale to the several Underwriters of the Firm Shares on the
First Closing Date is not consummated because (i) this Agreement is terminated
by the Company for any reason, (ii) this Agreement is terminated by the
Representative in accordance with the provisions of Section 10(i) hereof, (iii)
any condition of the Underwriters' obligations hereunder is not satisfied, or
(iv) of any refusal, inability or failure on the part of the Company to perform
any agreement herein or to comply with any provision hereof (unless such failure
to satisfy such condition or to comply with any provision hereof is due to the
default or omission of the Representative), the Company agrees to reimburse you
upon demand up to $150,000 for all accountable out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been reasonably
incurred by you and them in connection with the proposed purchase and the sale
of the Shares. In the event that the Underwriters determine to terminate the
offering for reasons other than those set forth in Section 7 of this Agreement,
the Underwriters shall be responsible for their own out-of-pocket expenses,
excluding fees and disbursements of counsel for the Underwriters, which fees and
disbursements the Company shall reimburse.
-15-
SECTION 7. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Additional Shares on the Second Closing Date
shall be subject to the accuracy in all material respects of the representations
and warranties on the part of the Company herein set forth as of the date hereof
and as of the First Closing Date and the Second Closing Date, as the case may
be, to the accuracy of the statements of the Company made pursuant to the
provisions hereof, to the performance in all material respects by the Company of
its respective obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 5:00 P.M., Eastern
Time, on the first full business day after the date of this Agreement, or such
later time as shall have been consented to by you but in no event later than
5:00 P.M., Eastern Time, on the third full business day following the date
hereof; and prior to the First Closing Date or the Second Closing Date, as the
case may be, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission. If the Company has elected to rely
upon Rule 430A, the information concerning the initial public offering price of
the Securities and price-related information shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed period and
the Company will provide evidence satisfactory to the Representative of such
timely filing (or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements of
Rules 430A and 424(b)).
(b) The Shares shall have been qualified for sale under the blue sky
laws of such states as shall have been specified by you.
(c) The legality and sufficiency of the authorization, issuance and
sale of the Shares hereunder, the validity and form of the certificates
representing the Shares, the execution and delivery of this Agreement, the
Pricing Agreement, and all corporate proceedings and other legal matters
incident thereto, and the form of the Registration Statement and the Prospectus
(except financial statements) shall have been approved by counsel for the
Underwriters.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting the business or
properties of the Company and its subsidiaries, or TexStar and its subsidiary,
in each case taken as a whole, whether or not arising in the ordinary course of
business, which, in your reasonable judgment, makes it impractical to proceed
with the public offering or delivery of the Shares as contemplated hereby or to
attempt to enforce contracts for the purchase of the Shares.
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(e) There shall have been furnished to you on the First Closing Date
or the Second Closing Date, as the case may be:
(i) An opinion of Xxxxxx & Xxxxxx, L.L.P., Dallas, Texas, counsel
for the Company, addressed to you and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) Each of the Company and TexStar is validly existing as
a corporation in good standing under the laws of the State of Delaware
and the United States of America, as the case may be, with full
corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus; the Company is a
bank holding company duly registered with the Federal Reserve Board
under the BHCA; TexStar is a national bank in good standing with the
OCC; and each of the Company and TexStar has been duly qualified to do
business as a foreign corporation under the corporation law of, and is
in good standing as such in, every jurisdiction where the ownership or
leasing of property, or the conduct of its business, requires such
qualification except where the failure so to qualify would not have a
Material Adverse Effect.
(2) Each Bank is a national bank duly chartered and
organized by authority of the OCC, validly existing and in good
standing under the laws of the United States of America. TexStar has
no subsidiaries. Each subsidiary of the Company is validly existing as
a corporation in good standing under the laws of its state of
incorporation with full corporate power and authority to own or lease
its properties and conduct its business as described in the
Prospectus; and each subsidiary of its Company has been duly qualified
to do business as a foreign corporation under the corporation law of,
and is in good standing as such in, every jurisdiction where the
ownership or leasing of property, or the conduct of its business,
requires such qualification except where the failure so to qualify
would not have a Material Adverse Effect.
(3) The Company has an authorized capitalization as set
forth in the Prospectus and the Shares conform, in all material
respects, to the description thereof contained in the Prospectus.
(4) No consent, approval, authorization or other order of
or filing with, any court, regulatory body, administrative agency or
other governmental body is legally required for the execution,
delivery and performance of this Agreement by the Company, except as
may be required
-17-
under or by the 1933 Act, the Amex or the blue sky laws of the various
jurisdictions.
(5) Each of this Agreement and the Pricing Agreement have
been duly and validly authorized and executed by the Company and
constitutes a valid and binding obligation of the Company except only
insofar as (i) such agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other laws relating to
creditors' rights generally, (ii) the remedy of specific performance
and injunctive and other equitable relief may be subject to equitable
defenses, and (iii) such enforcement may be subject to any limitations
under applicable federal securities laws relating to indemnification
and contribution.
(6) The Registration Statement has become effective under
the 1933 Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated by the Commission under the 1933 Act,
and the Registration Statement (including the information deemed to be
part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), the Prospectus and each
amendment or supplement thereto (except for the financial statements
and other statistical or financial data included therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act; and the
Primary Shares to be issued to the Underwriter have been approved for
listing on the Amex upon official notice of issuance.
(7) There are no contracts or documents required to be
described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are not described or
filed, as required, and such contracts and documents as are summarized
in the Registration Statement or Prospectus are fairly summarized in
all material respects; and there are no statutes or regulations or any
legal or governmental proceedings pending or, to the knowledge of such
counsel, threatened, required to be described in the Prospectus which
are not described as required.
(8) All of the issued and outstanding shares of the
Company's capital stock have been duly authorized, validly issued and
are fully paid and non-assessable and free of preemptive or other
similar rights under the General Corporation Law of the State of
Delaware, and to such counsel's knowledge there are no options,
agreements, contracts or other
-18-
rights in existence to acquire from the Company any shares of Common
Stock, except as set forth in the Prospectus. Except as set forth in
the Prospectus, to such counsel's knowledge there are no holders of
the securities of the Company having rights to the registration
thereof. The Company has no subsidiary which conducts business as a
bank under the laws of the State of Texas or Federal law, other than
Surety Bank. All of the capital stock of each subsidiary of the
Company, other than Surety Bank, has been duly authorized, validly
issued and is fully paid and non-assessable. All of the outstanding
capital stock of each of the Banks has been duly authorized and
validly issued and is fully paid and, subject to 12 U.S.C. (S) 55
(1982), nonassessable. The Company, directly or indirectly, owns of
record, free and clear of any liens, claims, encumbrances or rights of
others, all of the issued and outstanding shares of each of its
subsidiaries, except as described in the Prospectus. To such counsel's
knowledge, there are no options, agreements, contracts or other rights
in existence to purchase or acquire from the Company or its
subsidiaries any issued and outstanding shares of such subsidiaries.
(9) The Primary Shares to be sold by the Company pursuant
to this Agreement and the Pricing Agreement have been duly authorized
and, when issued and paid for in accordance with this Agreement and
the Pricing Agreement, will be validly issued, fully paid and non-
assessable; the holders of the Shares will not be subject to personal
liability under the General Corporation Law of the State of Delaware
by reason of being such holders; the Shares are not subject under the
General Corporation Law of the State of Delaware to the preemptive
rights of any shareholder of the Company.
(10) This Agreement and the Pricing Agreement have been
duly and validly authorized, executed and delivered by the Company.
(11) The statements in the Prospectus under the captions
"Regulation and Supervision" and "Description of Securities," insofar
as they constitute conclusions of law, are correct in all material
respects.
(12) The execution, delivery and performance by the Company
of this Agreement and the Pricing Agreement have been duly authorized
by all necessary corporate action and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or
bylaws (as amended) and do not and will not result in the breach of,
or violate, any of the terms or provisions of or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon
-19-
any property or assets of the Company or its subsidiaries under any
material agreement, franchise, license, indenture, lease, mortgage,
deed of trust, or other instrument known to such counsel to which the
Company or any subsidiary is a party or by which the Company, any
subsidiary or the property of any of them may be bound or affected,
or, to such counsel's knowledge, any law, order, judgment, decree,
rule or regulation applicable to the Company or any subsidiary of any
government, governmental instrumentality, court or regulatory body,
administrative agency or other governmental body having jurisdiction
over the Company or any subsidiary or any of their respective
properties, or any order of any court or governmental agency or other
regulatory authority entered in any proceeding to which the Company or
any subsidiary was or is now a party or by which it is bound.
(13) There is no material legal proceeding pending or, to
such counsel's knowledge, threatened against the Company except as
disclosed in the Prospectus.
(14) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(15) That certain Reorganization Agreement dated October
10, 1997 among TexStar, certain shareholders of TexStar (for certain
limited purposes) and the Company and the transactions contemplated
thereby has been authorized by all necessary corporate action on the
part of the Company, has been executed and delivered by the Company
and the other parties thereto and constitutes a valid and binding
obligation of the Company (assuming the due authorization, execution
and delivery thereof by the other parties thereto) enforceable against
the Company in accordance with its terms, except insofar as (i) such
agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws relating to creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding thereafter may be
brought.
In rendering such opinion, such counsel may rely, provided
that the opinion shall state that you and they are entitled to so
rely, as to factual matters on certificates of the officers and
employees of, and accountants for, the Company, and as to certain
legal matters, the opinion of
-20-
Xxxxx & Holland. Such opinion may contain such other qualifications
and assumptions as are reasonably acceptable to counsel for the
Underwriter.
In addition, counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
and representatives of the Underwriters and their counsel, at which
the contents of the Registration Statement, the Prospectus and related
matters were discussed and, although such counsel is not passing upon,
and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement
or the Prospectus and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to
factual matters upon the statements of officers and other
representatives of the Company), no facts have come to such counsel's
attention that have led them to believe that the Registration
Statement (other than financial statements, the notes thereto and
related schedules and other financial, statistical and accounting data
included therein or omitted therefrom, as to which such counsel need
express no belief), as amended or supplemented, if applicable, at the
time such Registration Statement or any post-effective amendment
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under the 1933
Act), or that the Prospectus (other than financial statements, the
notes thereto and related schedules and other financial, statistical
and accounting data included therein or omitted therefrom, as to which
such counsel need express no view) as amended or supplemented, if
applicable, as of its date and the First Closing Date or the Second
Closing Date, as applicable, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein not misleading in light of the circumstances
under which they were made.
(ii) Such opinion or opinions of Xxxxxxxxx & Xxxxxxxxx, L.L.P.,
counsel for the Underwriters, dated the First Closing Date or the Second
Closing Date, as the case may be, to such matters as you may reasonably
require.
(iii) A certificate of the Company executed by the chief
executive officer and the principal financial officer of the Company, dated
the First Closing Date or the Second Closing Date, as the case may be, to
the effect that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct, in all
material
-21-
respects, as of the date of this Agreement and as of the First Closing
Date or the Second Closing Date, as the case may be, and the Company
has complied, in all material respects, with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as part of the Registration Statement or any amendment thereto;
no stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best knowledge of the respective
signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subsection shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
paragraphs (1) and (2) of this subsection to be set forth in said
certificate.
(iv) At the time the Pricing Agreement is executed and also on
the First Closing Date and the Second Closing Date, as the case may be,
there shall be delivered to you letters addressed to you and the Board of
Directors of the Company from Coopers & Xxxxxxx LLP, and Xxxxxxxx &
Rishebarger, independent accountants, the first one to be dated the date of
the Pricing Agreement, the second one to be dated the First Closing Date
and the third one (in the event of a second closing) to be dated the Second
Closing Date, to the effect set forth in Exhibit B.
(v) All conditions to the consummation of the transactions
among the Company, TexStar and certain shareholders described in the
Prospectus under the caption "The TexStar Acquisition" shall have been
satisfied in a manner satisfactory to the Representative in its reasonable
discretion.
(vi) The Representative shall have received a Lock-Up Letter
from each executive officer and director of the Company.
(vii) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel for the Underwriters. The Company
shall furnish you with such manually signed or
-22-
conformed copies of such opinions, certificates, letters and documents as you
reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company without liability
on the part of the Underwriter, the Company, except for the expenses to be paid
or reimbursed by the Company pursuant to Section 6 hereof and except to the
extent provided in Section 8 hereof.
Section 8. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act or the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses whatsoever (including
but not limited to reasonable attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the 1933 Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon any untrue statement of a material fact
contained in any preliminary prospectus or the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arise out of or are based in whole or in part on any inaccuracy
in the representations and warranties of the Company contained herein or any
failure of the Company to perform its respective obligations hereunder or under
law, except insofar as such losses, claims, damages, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or
allegation thereof which has been made therein or omitted therefrom in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representative expressly for use
therein; provided, however, that the indemnification contained in this paragraph
with respect to any preliminary prospectus shall not inure to the benefit of the
Underwriter (or of any person controlling such Underwriter) with respect to any
action or claim arising from the sale of the Shares by such Underwriter brought
by any person who purchased Shares from the Underwriter to the extent it is
determined by a court of competent jurisdiction in a final non-appealable
decision that (i) a copy of the Prospectus (as amended or supplemented if any
amendment or supplements thereto shall have been furnished to the Underwriter
prior to the written confirmation of the sale involved) shall not have been
given or sent to such person by or on behalf of the Underwriter with or prior to
the written confirmation of the sale involved and (ii) the untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the Prospectus (as amended or supplemented if amended or
supplemented as aforesaid). In addition to its other obligations under this
Section 8(a), the Company agrees that, as an interim measure during the pendency
of any such claim, action, investigation,
-23-
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 8(a),
it will promptly reimburse the Underwriter for all reasonable legal expenses as
they are incurred in connection with investigating or defending such claim,
action, investigation, inquiry or other proceeding. To the extent that any such
interim reimbursement payment is held by a court of competent jurisdiction to
have been improper, each recipient thereof will promptly return it to the
Company.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the meaning
of the 1933 Act and the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter and but only with respect to
information relating to such Underwriter furnished in writing to the Company by
or on behalf of such Underwriter expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment
thereof or supplement thereto.
(c) If any action or claim shall be brought against any indemnified
party under this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
promptly notify the indemnifying party in writing of the commencement thereof.
No indemnification shall be available to any party who shall fail to give notice
as provided in this Section 8(e) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but otherwise the omission so to
notify the indemnifying party will not relieve it from any liability that it may
have to an indemnified party under this Section 8. In case any such action is
brought against an indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. Upon receipt of notice from the
indemnifying party to such indemnified party of its election to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under Section 8
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the indemnifying party has
agreed in writing to pay such fees and expenses, (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the named parties to any such action
(including any impleaded party) include such indemnified party and the
indemnifying party and such indemnified party shall have been advised in writing
by counsel having experience in securities litigation that there may be one or
more legal defenses available to it which are different from or additional to
those available to the
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indemnifying party (in which case if such indemnified party notifies the
indemnifying party, the indemnifying party shall, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of not more than one separate firm
of attorneys for all such indemnified parties) and which, in the opinion of such
counsel, would make it impractical to have common representation. The
indemnifying party shall not be liable for any settlement of any such action
effected without its written consent, but if settled with its written consent,
or if there shall be a final judgment for the plaintiff in any such action and
the time for filing all appeals has expired, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss or liability by reason of such settlement or
judgment.
(d) (i) If the indemnification provided for in this Section 8 is
unavailable as a matter of law to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (A) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Underwriters from the offering of the Shares or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of the Company and
of the Underwriter in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits received by
the Company and the Underwriter shall be deemed to be in the same proportion, in
the case of the Company, as the total price paid to the Company, for the Shares
by the Underwriters (net of underwriting discounts and commissions but before
deducting expenses), and, in the case of the Underwriter, as the underwriting
commissions received by them, bears to the total of such amounts paid to the
Company and received by the Underwriter as underwriting commissions in each case
as contemplated by the Prospectus. The relative fault of the Company and of the
Underwriter shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Underwriter and the party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omissions.
(ii) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8(f) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in subsection (f)(i). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in subsection (f)(i) shall
be deemed to include, subject to the limitations set forth in this Section
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8(f), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9(f), no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling such Underwriter, the Company or its directors or officers (or any
person controlling any such person), (ii) acceptance of any Shares and payment
therefor or hereunder and (iii) any termination of this Agreement. A successor
or assign of any Underwriter, the Company or its directors or officers and their
legal and personal representatives (or of any person controlling an Underwriter
or the Company) shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 8.
SECTION 9. Effective Date. This Agreement shall become effective
immediately as to Sections 6, 8 and 10 and as to all other provisions upon
execution and delivery of the Pricing Agreement.
SECTION 10. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may also be
terminated by you in your absolute discretion, without liability on your part to
the Company, by notice given to the Company, if prior to the First Closing Date
or, with respect to the Additional Shares, on or prior to any later date on
which the Additional Shares are to be purchased, as the case may be, (i) there
has been, since the date of this Agreement or since the respective dates as of
which information is given in the Prospectus any material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries, or TexStar and its subsidiaries,
considered as a whole, whether or not arising in the ordinary course of
business; or (ii) trading in securities generally on the New York Stock
Exchange, the Amex or the National Association of Securities Dealers Automated
Quotation System shall have been suspended, or if there is a significant decline
in the value of securities generally on such exchanges or such market, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities generally shall have been required on either of such
exchanges or on such market, by the exchanges, market or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) a
general moratorium on savings bank, savings and loan
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association or commercial banking activities in the United States or in New York
or Texas shall have been declared by either Federal or state authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions the effect of which on the financial markets of
the United States is such as to make it, in your judgment, impracticable or
inadvisable to market the Shares or to enforce contracts for the purchase of
Shares. Notice of such cancellation shall be given to the Company by telegraph,
telephone or facsimile but shall be subsequently confirmed by letter.
SECTION 11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any termination of this Agreement or investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person, and will survive delivery of and payment
for the Shares sold hereunder.
SECTION 12. Notices. All communications hereunder will be in writing and,
if sent to the Underwriter will be mailed, delivered or telegraphed and
confirmed to Xxxxxx & Xxxxxx Incorporated, 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with a copy to Bracewell & Xxxxxxxxx, L.L.P.,
000 Xxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxx X.
Xxxxxx XX; if sent to the Company will be mailed, delivered or telegraphed and
confirmed to the Company at its corporate headquarters with a copy to Xxxxxx &
Xxxxxx, L.L.P., 00000 Xxxx Xxxx, XX 00, Xxxxxx, Xxxxx 00000-0000, Attention: Xxx
Xxxxxx
SECTION 13. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representative and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 8,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any
Underwriter merely by reason of such purchase.
SECTION 14. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 15. Applicable Law. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the Underwriter, all in
accordance with its terms.
Very truly yours,
SURETY CAPITAL CORPORATION
By:
---------------------------------------------
X.X. Xxxxxx
Vice President and Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
XXXXXX & XXXXXX INCORPORATED
By:
------------------------
Xxxxx Xxxxxxx
Partner
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EXHIBIT A
SURETY CAPITAL CORPORATION
1,500,000 Shares Common Stock*
PRICING AGREEMENT
February __, 1998
Xxxxxx & Xxxxxx Incorporated
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated February __, 1998
(the "Underwriting Agreement") relating to the sale by the Company and the
purchase by Xxxxxx & Xxxxxx Incorporated, as Representative of the several
Underwriters (the "Representative"), of the above Shares. All terms herein
shall have the definitions contained in the Underwriting Agreement except as
otherwise defined herein.
Pursuant to Section 3 of the Underwriting Agreement, the Company agrees
with the Underwriter as follows:
1. The initial public offering price per share for the Shares shall be
$___.
2. The purchase price per share for the Shares to be paid by the
Underwriters shall be $___ being an amount equal to the initial public offering
price set forth above less $___ per share.
-------------------
*Plus an option to acquire up to 225,000 additional shares to cover
overallotments.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the Representative, all in
accordance with its terms.
Very truly yours,
SURETY CAPITAL CORPORATION
By:
----------------------------------------------
X.X. Xxxxxx
Vice President and Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
XXXXXX & XXXXXX INCORPORATED
By:
------------------------
Xxxxx Xxxxxxx
Partner
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EXHIBIT B
Comfort Letter of Coopers & Xxxxxxx LLP and Xxxxxxxx & Rishebarger
(1) They are independent public accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and any
supplementary financial information and schedules (and all pro forma financial
information) of the Company and its subsidiaries included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to December 31,
1994, a reading of minutes of meetings of the shareholders and directors of the
Company and its subsidiaries since December 31, 1994, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its subsidiaries (with an indication of the date thereof) and other procedures
as specified in such letter, nothing came to their attention which caused them
to believe that (i) the unaudited consolidated financial statements of the
Company and its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act or that such unaudited financial statements are not
fairly presented in accordance with generally accepted accounting principles,
and (ii) at a specified date not more than five days prior to the date thereof
in the case of the first letter and not more than two business days prior to the
date thereof in the case of the second and third letters, there was any change
in the capital stock or long-term debt or short-term debt (other than normal
payments) of the Company and its subsidiaries on a consolidated basis or any
decrease in consolidated shareholders' equity as compared with amounts shown on
the latest unaudited balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance sheet to a date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there were any decreases, as compared with the
corresponding period of the prior year, in consolidated net interest income,
consolidated noninterest income or in the total or per share amounts of net
earnings, except, in all instances, for changes or decreases which the
Prospectus discloses have occurred or may occur or which are set forth in such
letter.
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(4) They have carried out specified procedures, which have been agreed to
by the Underwriters, with respect to certain information in the Prospectus
specified by the Underwriters, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company and its subsidiaries.
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