<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1997.
REGISTRATION NO. 333-27771
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
STEWART ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 110 VETERANS MEMORIAL 72-0693290
BOULEVARD (I.R.S. EMPLOYER
(STATE OR OTHER METAIRIE, LOUISIANA 70005 IDENTIFICATION NUMBER)
JURISDICTION OF (504) 837-5880
INCORPORATION OR
ORGANIZATION) (ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)
JOSEPH P. HENICAN, III
CHIEF EXECUTIVE OFFICER AND
VICE CHAIRMAN OF THE BOARD
STEWART ENTERPRISES, INC.
P. O. BOX 19925
NEW ORLEANS, LOUISIANA 70179
(504) 837-5880
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
L. R. MCMILLAN, II RONALD J. FRAPPIER
JONES, WALKER, WAECHTER, JENKENS & GILCHRIST
POITEVENT, CARRERE & DENEGRE, L.L.P. A PROFESSIONAL CORPORATION
201 ST. CHARLES AVENUE 1445 ROSS AVENUE, SUITE 3200
NEW ORLEANS, LOUISIANA 70170-5100 DALLAS, TEXAS 75202-2711
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 18, 1997
PROSPECTUS
4,750,000 SHARES
LOGO
STEWART ENTERPRISES, INC.
CLASS A COMMON STOCK
Of the 4,750,000 shares of Class A Common Stock being offered hereby,
4,250,000 shares are being sold by the Company and 500,000 shares are being
sold by the Selling Shareholders. See "Selling Shareholders." The Company will
not receive any of the proceeds from the sale of the shares by the Selling
Shareholders. See "Use of Proceeds." The last reported sale price of the Class
A Common Stock (symbol "STEI") on the Nasdaq National Market on June 12, 1997
was $36.00 per share. See "Price Range of Common Stock and Dividend Policy."
The Company has two classes of common stock outstanding, Class A and Class B,
the rights of the holders of which are essentially identical, except that
holders of Class A Common Stock are entitled to one vote per share and holders
of Class B Common Stock are entitled to 10 votes per share. The Class B Common
Stock may be transferred only to certain transferees but is freely convertible
into an equal number of shares of Class A Common Stock. The Class A Common
Stock is freely transferable and non-convertible. Upon completion of the
offering, assuming that the over-allotment option described below is not
exercised, Frank B. Stewart, Jr., the Chairman of the Board of the Company and
one of the Selling Shareholders, will own beneficially shares of Class A and
Class B Common Stock having approximately 34.6% of the total voting power of
the Company.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
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<S> <C> <C> <C> <C>
Per Share............ $ $ $ $
- -------------------------------------------------------------------------------
Total(3)............. $ $ $ $
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</TABLE>
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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the offering, estimated at $269,441 payable by
the Company and $5,559 payable by the Selling Shareholders.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
712,500 additional shares of Class A Common Stock on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Class A Common Stock are offered subject to prior sale when, as
and if delivered to and accepted by the Underwriters, and subject to certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Class A Common Stock will be made on or about June , 1997 at
the offices of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York
10167.
-----------
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO CHICAGO CORPORATION
JOHNSON RICE & COMPANY L.L.C.
June , 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
AND THE IMPOSITION OF PENALTY BIDS. SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048, and Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet Web site containing reports, proxy statements and other
information regarding registrants that file electronically with the Commission
(http://www.sec.gov). Such reports, proxy statements and other information may
also be inspected at the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement"),
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Class A Common Stock offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Class A Common Stock offered hereunder,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document referred to
herein are not necessarily complete and, where such contract or other document
is an exhibit to the Registration Statement, each such statement is qualified
in all respects by the provisions of such exhibit, to which reference is
hereby made for a full statement of the provisions thereof.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference into this Prospectus (the Company's Exchange Act
file number is 0-19508): (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1996, filed January 24, 1997; (ii) the
description of the Company's Class A Common Stock set forth in its
Registration Statement under the Exchange Act dated September 5, 1991; (iii)
the Company's Quarterly Reports on Form 10-Q for the quarter ended January 31,
1997, filed March 17, 1997 and for the quarter ended April 30, 1997, filed
June 16, 1997; and (iv) the Company's Current Reports on Form 8-K, dated
December 5, 1996, filed December 6, 1996; dated March 10, 1997, filed March
11, 1997; dated May 23, 1997, filed May 23, 1997; and dated June 9, 1997,
filed June 9, 1997.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
to the extent that a statement contained herein or in any other document
subsequently filed which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus has been delivered, upon written or
oral request, a copy of any or all of the documents incorporated herein by
reference (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Stewart Enterprises, Inc., Attention: Kenneth C. Budde, Senior
Vice President-Finance, 110 Veterans Memorial Boulevard, Metairie, Louisiana,
70005, telephone (504) 837-5880.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes that the over-allotment option granted to the
Underwriters will not be exercised. Share and per-share amounts in this
Prospectus for fiscal years 1992 and 1993 have been adjusted to reflect the
Company's three-for-two stock split in the form of a 50% stock dividend
effected December 1, 1993. Additionally, share and per-share amounts for fiscal
years 1992 through 1996 have been adjusted to reflect the Company's three-for-
two stock split in the form of a 50% stock dividend effected June 21, 1996.
THE COMPANY
Stewart Enterprises, Inc. (the "Company") is the third largest provider of
products and services in the death care industry in North America. The Company
is a leader in the industry's movement toward consolidation, the integration of
funeral home and cemetery operations, the establishment of combined facilities,
and complete death care planning and delivery. Through its subsidiaries, the
Company operates 355 funeral homes and 125 cemeteries in 23 states, Puerto
Rico, Mexico, Australia, New Zealand, Canada and Spain. During fiscal year
1996, the Company acquired 134 funeral homes and 15 cemeteries for an aggregate
purchase price of $179.0 million. During fiscal year 1997, as of June 12, 1997,
the Company has acquired 56 funeral homes and five cemeteries for an aggregate
purchase price of $119.6 million and has entered into agreements in principle
or letters of intent to acquire 12 funeral homes and two cemeteries for an
aggregate purchase price of approximately $23.3 million.
The Company's strategy is to build market share in its existing markets
through extensive marketing, the sale of prearranged products and services and
the development of new funeral homes, and to expand in existing and new markets
through selective acquisitions. In each market in which it wishes to expand,
the Company's strategy is to acquire one or more premier facilities to serve as
a centerpiece for a group or cluster of other properties that may be acquired
subsequently in the same metropolitan area. The Company considers a funeral
home or cemetery to be a "premier" facility if, when measured by such factors
as tradition, heritage, reputation, physical size, volume of business,
available inventory, name recognition, aesthetics and potential for development
or expansion, it is one of the most highly regarded facilities in its market
area. Where feasible, the Company enters markets with, or subsequently
develops, combined operations in which a funeral home is located at and is
operated in conjunction with a Company-owned cemetery. The continued
acquisition and development of combined operations is a key component of the
Company's expansion plan.
The Company is a leader in the industry trend toward prearranged death care
planning. The Company believes that extensive marketing of death care
prearrangements assures a backlog of future business and builds current and
future market share. The Company markets a complete range of death care
products and services on a prearranged basis through a staff of approximately
3,000 commission sales counselors.
The Company believes that it is distinguishable from its competitors by the
quality of its funeral homes and cemeteries, the depth and experience of its
management team, its decentralized management structure and the quality and
value of its products and services.
The Company retains key managers of acquired companies and gives them
significant operational authority in order to assure the continuation of high
quality services and the maintenance of the acquired firm's reputation and
goodwill. The Company's 11 executive officers, five of whom joined the Company
through acquisitions, have an average of more than 24 years of experience in
the death care industry.
The Company is a Louisiana corporation, and the mailing address of its
executive offices is P.O. Box 19925, New Orleans, Louisiana 70179. Its
telephone number is (504) 837-5880.
3
<PAGE>
THE OFFERING
Securities Offered.......... 4,750,000 shares of Class A Common Stock, of
which 4,250,000 shares are being offered by the
Company and 500,000 shares are being offered by
the Selling Shareholders. See "Use of Proceeds"
and "Selling Shareholders."
Common Stock Outstanding
Prior to the Offering...... 40,499,320 shares of Class A Common Stock
1,777,510 shares of Class B Common Stock
Common Stock to be
Outstanding After the
Offering................... 44,749,320 shares of Class A Common Stock
1,777,510 shares of Class B Common Stock
Rights of Holders of Class
A and Class B Common
Stock...................... The rights of holders of Class A Common Stock and
Class B Common Stock are essentially identical,
except that holders of Class A Common Stock are
entitled to one vote per share and holders of
Class B Common Stock are entitled to 10 votes per
share. The Class B Common Stock may be
transferred only to certain transferees but is
freely convertible into an equal number of shares
of Class A Common Stock. The Class A Common Stock
is freely transferable and non-convertible.
Upon completion of the offering, Frank B.
Stewart, Jr., Chairman of the Board of the
Company and one of the Selling Shareholders, will
own beneficially approximately 8.7% of the
Company's outstanding Class A Common Stock and
100% of the Company's outstanding Class B Common
Stock. Because holders of the Class B Common
Stock are entitled to 10 votes per share, Mr.
Stewart will own beneficially shares of Class A
and Class B Common Stock having approximately
34.6% of the total voting power of the Company.
Use of Proceeds............. The Company intends to use the net proceeds from
the sale of the Class A Common Stock offered
hereby to fund acquisitions and for general
corporate purposes. Pending use for such
purposes, the net proceeds will be used to repay
outstanding indebtedness. See "Use of Proceeds."
Nasdaq National Market
Symbol..................... STEI
4
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
------------------------------------------------------ ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Revenues:
Funeral................ $ 61,493 $ 75,348 $116,266 $ 188,991 $ 225,461 $ 108,003 $ 140,510
Cemetery(1)............ 83,338 107,315 138,092 179,831 207,926 103,177 107,235
-------- -------- -------- ---------- ---------- ---------- ----------
Total revenues......... 144,831 182,663 254,358 368,822 433,387 211,180 247,745
Gross profit:
Funeral................ 17,227 22,398 31,785 55,309 72,239 34,301 46,735
Cemetery(1)............ 14,446 19,032 25,812 34,434 45,879 24,021 26,811
-------- -------- -------- ---------- ---------- ---------- ----------
Total gross profit..... 31,673 41,430 57,597 89,743 118,118 58,322 73,546
Corporate general and
administrative......... (5,030) (7,223) (8,157) (11,113) (14,096) 6,265 7,036
-------- -------- -------- ---------- ---------- ---------- ----------
Operating earnings
before performance-
based stock options.... 26,643 34,207 49,440 78,630 104,022 52,057 66,510
Performance-based stock
options................ -- -- -- (17,252) -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Operating earnings...... 26,643 34,207 49,440 61,378 104,022 52,057 66,510
Interest expense........ (5,414) (6,540) (8,877) (22,815) (26,051) (12,022) (19,033)
Investment and other
income................. 1,221 1,902 1,635 2,937 4,104 1,407 1,566
Distributions to prior
ITI shareholders(2).... (1,508) -- -- -- -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Earnings from continuing
operations before
income taxes........... $ 20,942 $ 29,569 $ 42,198 $ 41,500(3) $ 82,075 $ 41,442 $ 49,043
======== ======== ======== ========== ========== ========== ==========
Earnings from continuing
operations............. $ 14,195 $ 18,839 $ 27,253 $ 26,145(3) $ 51,297 $ 25,901 $ 31,878
======== ======== ======== ========== ========== ========== ==========
Earnings per common
share from continuing
operations(4).......... $ .64 $ .71 $ .85 $ .72(3) $ 1.24 $ .63 $ .76
======== ======== ======== ========== ========== ========== ==========
Weighted average common
shares outstanding (in
thousands)(4).......... 22,239 26,535 31,910 36,386 41,410 41,196 42,005
======== ======== ======== ========== ========== ========== ==========
Dividends declared per
common share(4)........ $ .005 $ .018 $ .027 $ .033 $ .066 $ .027 $ .04
======== ======== ======== ========== ========== ========== ==========
<CAPTION>
OCTOBER 31, APRIL 30, 1997
------------------------------------------------------ ----------------------
AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(5)
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Assets................. $299,996 $455,942 $759,390 $1,072,435 $1,360,913 $1,518,398 $1,518,398
Long-term debt, less
current maturities.... 82,740 122,517 260,913 317,451 515,901 638,963 493,117
Shareholders' equity... 143,134 232,006 325,671 483,978 547,447 573,904 719,750
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
------------------------------------------------------ ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Funeral homes in
operation at end of
period................ 48 76 105 161 298 193 342
At-need funerals
performed............. 12,365 14,588 23,539 37,263 38,351 18,122 28,473
Prearranged funerals
performed............. 5,449 6,320 7,571 9,225 15,422 7,691 8,600
-------- -------- -------- ---------- ---------- ---------- ----------
Total funerals
performed........... 17,814 20,908 31,110 46,488 53,773 25,813 37,073
Prearranged funerals
sold.................. 15,250 17,859 26,637 33,787 37,545 17,354 19,873
Backlog of prearranged
funerals at end of
period................ 112,801 130,610 183,886 222,532 294,829 237,818 336,211
Cemeteries in
operation at end of
period................ 35 57 90 105 120 113 123
Interments performed... 22,107 26,557 33,118 42,480 46,007 23,313 27,601
</TABLE>
5
<PAGE>
- --------
(1) Includes the Company's construction and sales operations, which previously
were classified as a separate industry segment.
(2) Investors Trust, Inc. ("ITI"), which generally administers the Company's
trust funds and escrow accounts, was acquired by the Company on November 1,
1992.
(3) Includes a non-recurring, non-cash charge of $17.3 million ($10.9 million,
or $.30 per share, after-tax) recorded during the third quarter of fiscal
year 1995 in connection with the vesting of the Company's performance-based
stock options. Excluding that charge, earnings from continuing operations
before income taxes, earnings from continuing operations, and earnings per
common share from continuing operations for fiscal year 1995 were $58.8
million, $37.0 million and $1.02, respectively.
(4) Fiscal years 1992 and 1993 reflect the Company's three-for-two split of its
Class A and Class B Common Stock effected December 1, 1993 by means of a
50% stock dividend. Additionally, fiscal years 1992 through 1996 reflect
the Company's three-for-two split effected June 21, 1996 by means of a 50%
stock dividend.
(5) Adjusted to reflect the sale of the Class A Common Stock offered hereby and
the application of the net proceeds from such sale, based on an estimated
offering price of $36.00 per share. See "Use of Proceeds" and
"Capitalization."
6
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,250,000 shares of
Class A Common Stock offered by it hereby are estimated to be approximately
$145.8 million ($170.3 million if the Underwriters' over-allotment option is
exercised in full), based on an estimated offering price of $36.00 per share
and after deducting estimated underwriting discounts and commissions and
expenses of the offering payable by the Company. The Company will not receive
any proceeds from the sale of Class A Common Stock by the Selling
Shareholders.
The Company's growth strategy depends largely on its ability to consummate
acquisitions, and the availability of substantial financial resources is
important to its ability to compete effectively for acquisition opportunities.
The purpose of this offering is to further strengthen the Company's financial
position and to provide it with the financial flexibility necessary to take
advantage of acquisition opportunities as they arise. The Company initially
will use substantially all of the net proceeds to reduce the balances
outstanding on its revolving credit facilities, which amounts will then become
available to the Company to fund its continuing acquisition program and for
general corporate purposes. As of June 12, 1997, $427 million was outstanding
under the Company's $600 million revolving line of credit and $0.1 million was
outstanding under the Company's $10 million revolving line of credit. The $600
million revolving line of credit bears interest at the lead lending bank's
prime rate, or at certain optional rates at the Company's election (a weighted
average rate of approximately 6.22% at June 12, 1997), contains a facility fee
of 12.5 basis points, and matures on April 30, 2002. The $10 million revolving
line of credit bears interest at the lending bank's prime rate or at certain
optional rates at the Company's election (a weighted average rate of
approximately 6.0% at June 12, 1997) and matures on December 31, 1997.
Under the most restrictive of its credit agreements, the Company is required
to maintain a debt-to-equity ratio of not more than 1.25 to 1.0. After
application of the net proceeds of this offering, the Company's additional
borrowing capacity would be approximately $377 million under this ratio.
Of the funds drawn by the Company on its revolving lines of credit in the 12
months ended April 30, 1997, approximately 80% was used to fund acquisitions,
and the remainder was used for additions to property and equipment, including
new funeral home construction, and general corporate purposes.
As of June 12, 1997, pending acquisitions consisted of 12 funeral homes and
two cemeteries for an aggregate purchase price of approximately $23.3 million.
7
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Class A Common Stock is traded on the Nasdaq National Market
under the Symbol STEI. The following table sets forth, for the periods
indicated, the range of high and low bid prices, as reported by the Nasdaq
National Market. Prices for fiscal year 1995 and for the first three quarters
of fiscal year 1996 have been adjusted to reflect a three-for-two stock split
effected in the form of a 50% stock dividend on June 21, 1996.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1997
Third Quarter (through June 12, 1997)............... 37 1/2 32 1/2
Second Quarter...................................... 37 1/2 32 1/4
First Quarter....................................... 38 3/4 32 3/4
Fiscal Year 1996
Fourth Quarter...................................... 36 26 3/4
Third Quarter....................................... 32 11/64 24 1/2
Second Quarter...................................... 31 24 43/64
First Quarter....................................... 26 11/64 21 11/64
Fiscal Year 1995
Fourth Quarter...................................... 24 20 11/64
Third Quarter....................................... 22 43/64 18 1/2
Second Quarter...................................... 18 21/64 15 53/64
First Quarter....................................... 16 1/2 15 1/2
</TABLE>
The Company declared quarterly cash dividends of $.007 per share on its
Class A and Class B Common Stock during the first three quarters of fiscal
year 1995, $.013 per share during the fourth quarter of fiscal year 1995 and
the first two quarters of fiscal year 1996, and $.02 per share thereafter. The
Company intends to continue its current policy of declaring quarterly cash
dividends on the Class A and Class B Common Stock in the amount of $.02 per
share. The declaration and payment of dividends is at the discretion of the
Board of Directors and will depend on the Company's results of operations,
financial condition, cash requirements, future prospects and other factors
deemed relevant by the Board of Directors. The most restrictive of the
Company's credit agreements restricts the declaration and payment of cash
dividends on the capital stock of the Company within any period of four
consecutive quarters to 50% or less of the Company's consolidated net earnings
for those four quarters. Additionally, the credit agreement limits the
purchase, redemption, or retirement of any shares of the Company's capital
stock to 5% or less of its consolidated net worth on the payment date.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of April
30, 1997, and such capitalization as adjusted to reflect the sale by the
Company of the 4,250,000 shares of Class A Common Stock offered hereby,
assuming no exercise of the Underwriters' over-allotment option (based upon an
estimated offering price of $36.00 per share and after deducting estimated
underwriting discounts and commissions and expenses of the offering payable by
the Company).
<TABLE>
<CAPTION>
APRIL 30, 1997
--------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt................ $ 11,108 $ 11,108
========== ==========
Long-term debt, excluding current maturities(2)
Revolving lines of credit......................... $ 410,907 $ 265,061
Senior notes...................................... 117,857 117,857
6.70% Notes due 2003.............................. 100,000 100,000
Other, principally seller financing of acquired
operations or assumption upon acquisition........ 10,199 10,199
---------- ----------
Total long-term debt............................ 638,963 493,117
---------- ----------
Preferred stock, $1.00 par value, 5,000,000 shares
authorized; none outstanding....................... -- --
Shareholders' equity:
Class A Common Stock, no par value, $1.00 stated
value, 150,000,000 shares authorized; 40,449,486
shares issued and outstanding; 44,699,486 shares
as adjusted...................................... 40,449 44,699
Class B Common Stock, no par value, $1.00 stated
value, 5,000,000 shares authorized; 1,777,510
shares issued and outstanding.................... 1,778 1,778
Additional paid-in capital........................ 311,076 452,672
Retained earnings................................. 245,509 245,509
Cumulative foreign translation adjustment......... (25,190) (25,190)
Unrealized appreciation of investments............ 282 282
---------- ----------
Total shareholders' equity...................... 573,904 719,750
---------- ----------
Total capitalization............................ $1,212,867 $1,212,867
========== ==========
</TABLE>
- --------
(1) Adjusted to reflect the sale of the Class A Common Stock offered hereby and
the application of the net proceeds of approximately $145.8 million
therefrom to repay a portion of the balance outstanding under the Company's
revolving lines of credit, which amount will then become available to the
Company to fund its continuing acquisition program and for general
corporate purposes.
(2) Long-term debt outstanding at April 30, 1997, excluding current maturities,
included $410.9 million under the Company's $600 million and $10 million
revolving lines of credit. The $600 million revolving line of credit
matures on April 30, 2002, contains a facility fee of 12.5 basis points,
and borrowings bear interest at the lead lending bank's prime rate, or
certain optional rates at the Company's election. As of June 12, 1997,
borrowings under this revolving line of credit totalled $427 million and
had a weighted average interest rate of approximately 6.22%. The Company
also has available a $10 million revolving line of credit which matures on
December 31, 1997 and is used for interim cash advances in amounts less
than $5 million, which are cumulated periodically and replaced with cash
advances under the $600 million revolving line of credit. As of June 12,
1997, $0.1 million was outstanding with a weighted average interest rate of
6.0%. Long-term debt outstanding at April 30, 1997, excluding current
maturities, also included (i) $42.9 million of senior notes, bearing
interest at 6.04% and maturing on November 30, 2003, with principal
payments of $7.143 million due on November 30 each year; (ii) $75 million
of senior notes with an average maturity of seven years, a weighted average
interest rate of 8.44%, and principal payments of $15 million due May 1,
1998, $16.7 million due on each of November 1, 2000 and 2001, $16.6 million
due November 1, 2002 and $10 million due on November 1, 2006; and (iii)
$100 million senior debt securities, bearing interest at 6.70% due 2003.
All of the Company's debt is unsecured, except for approximately $2 million
as of April 30, 1997, which was incurred principally in connection with
acquisitions.
9
<PAGE>
BUSINESS
THE COMPANY
The Company is the third largest provider of products and services in the
death care industry in North America. The Company is a leader in the
industry's movement toward consolidation, the integration of funeral home and
cemetery operations, the establishment of combined facilities, and complete
death care planning and delivery. Through its subsidiaries, the Company
operates 355 funeral homes and 125 cemeteries in 23 states, Puerto Rico,
Mexico, Australia, New Zealand, Canada and Spain. During fiscal year 1996, the
Company acquired 134 funeral homes and 15 cemeteries for an aggregate purchase
price of $179.0 million. During fiscal year 1997, as of June 12, 1997, the
Company has acquired 56 funeral homes and five cemeteries for an aggregate
purchase price of $119.6 million and has entered into agreements in principle
or letters of intent to acquire 12 funeral homes and two cemeteries for an
aggregate purchase price of approximately $23.3 million.
The Company believes that it is distinguishable from its competitors by the
quality of its funeral homes and cemeteries, the depth and experience of its
management team, its decentralized management structure, and the quality and
value of its products and services. The Company believes that it owns and
operates one or more of the premier death care facilities in each of its
principal markets, which serve as a centerpiece for a group or cluster of
other properties in the same metropolitan area. The Company considers a
funeral home or cemetery to be a "premier" facility if, when measured by such
factors as tradition, heritage, reputation, physical size, volume of business,
available inventory, name recognition, aesthetics and potential for
development or expansion, it is one of the most highly regarded facilities in
its market area.
The Company retains key managers of acquired companies and gives them
significant operational authority in order to assure the continuation of high
quality services and the maintenance of the acquired firm's reputation and
goodwill. The Company's 11 executive officers, five of whom joined the Company
through acquisitions, have an average of more than 24 years of experience in
the death care industry.
OPERATING STRATEGY
The Company's operating strategy is to build market share and increase
profit margins by marketing and providing, both prior to and at the time of
need, a complete range of death care products and services at competitive
prices. In order to achieve those objectives, the Company has acquired or
developed in most of its markets one or more premier facilities to serve as a
centerpiece for a cluster of other properties in the same area. Such
clustering provides certain economies of scale by, for example, enabling the
Company's facilities to share vehicles and employees, to reduce administrative
expenses, to centralize embalming services and to pool inventories of caskets
and other merchandise. Further, where feasible, the Company acquires, or
subsequently develops, combined operations in which a funeral home is located
at and is operated in conjunction with a Company-owned cemetery. Although
profit margins of cemetery operations are traditionally lower than those of
funeral homes, the Company's experience with combined operations has
demonstrated that the combination of a cemetery with a funeral home can
increase significantly the market share of the cemetery and funeral home and
provide cost savings through the sharing of facilities and other resources,
thereby increasing the overall profitability of both.
The Company's operating strategy also emphasizes a decentralized management
structure under which funeral home and cemetery operations are managed by four
regional division presidents, each of whom is an experienced death care
industry executive who has responsibility for all operations in his geographic
region. Although certain financial management and policy matters are
centralized, division presidents, local funeral home directors and cemetery
managers have substantial autonomy in the manner in which their products and
services are marketed and delivered and their funeral homes and cemeteries are
managed. The Company believes that this strategy permits each local firm to
maintain its unique style of operation and to capitalize on its reputation and
goodwill, while maintaining centralized supervisory controls and providing
specialized services at the corporate level.
10
<PAGE>
Effective January 1, 1997, the Company expanded its two North American
operating divisions to four. The new Western Division includes the Company's
operations in Canada and on the West Coast, which previously were part of the
Central Division. The new Southern Division includes the Company's operations
in Florida, Puerto Rico and Mexico, which previously were part of the Eastern
Division. These changes should enable the Company to more efficiently meet the
demands of future growth and support the Company's philosophy of decentralized
management.
The Company is a leader in the industry trend toward prearranged funeral
planning. The Company believes that extensive marketing of death care
prearrangements assures a backlog of future business and builds current and
future market share. The Company markets a complete range of death care
products and services on a prearranged basis through a staff of approximately
3,000 commission sales counselors. Prearranged plans are generally funded
through trust, escrow or insurance arrangements.
ACQUISITION STRATEGY
The Company's acquisition strategy is to expand in existing and new markets
by acquiring premier funeral homes and cemeteries that have the potential to
serve as a centerpiece for a group or cluster of other properties that may be
acquired subsequently in the same metropolitan area. From the Company's
initial public offering in October 1991 through June 12, 1997, it has acquired
304 funeral homes and 96 cemeteries and has entered 17 states, Puerto Rico and
five foreign countries.
The following table sets forth certain information with respect to the
Company's completed and pending acquisition activity.
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
FUNERAL HOMES PURCHASE PRICE
AND CEMETERIES (IN MILLIONS)
-------------- --------------
<S> <C> <C>
Properties owned at
October 31, 1991......... 72 $ --
Acquisitions(1):
Fiscal year 1992........ 11 30.0
Fiscal year 1993........ 49 94.6
Fiscal year 1994........ 60 177.6
Fiscal year 1995........ 70 154.4
Fiscal year 1996........ 149 179.0
November 1, 1996--June
12, 1997............... 61 119.6
Pending acquisitions as
of June 12, 1997....... 14 23.3
</TABLE>
- --------
(1) Excludes funeral homes constructed by the Company.
----------------
The Company's acquisition strategy reflects a trend in the United States
death care industry of transition from small, family-owned firms to large,
professionally-managed, integrated, multiple-facility firms. Opportunities for
growth through the construction of new cemeteries and funeral homes are
limited because of a lack in many communities of available or reasonably
priced land with appropriate zoning and the existence of an adequate number of
funeral homes already serving a mature market. Accordingly, companies in the
death care industry can achieve significant growth only by increasing market
share through such means as acquisitions, extensive marketing of prearranged
products and services, and the development of combined operations.
In evaluating a potential acquisition, the Company also considers factors
such as the size of the community the property serves, the size and reputation
of the property in the community, the proximity of the property to other of
the Company's funeral homes or cemeteries, the opportunities for additional
acquisitions and growth in
11
<PAGE>
the community, and the potential for increasing the cemetery's profitability
through increasing prearranged marketing efforts. In keeping with the quality
of its existing properties, the Company is particularly careful about the
quality of the properties it seeks to acquire.
The Company believes that the consolidation trend that began in the United
States a number of years ago has now begun to evolve in other countries,
particularly in Europe, Canada, Australia, New Zealand and Mexico. The Company
has acquired a total of 151 funeral homes and cemeteries in Mexico, Australia,
New Zealand, Canada and Spain since it first entered foreign markets in the
fourth quarter of fiscal year 1994, and it believes that attractive expansion
opportunities exist in those and other foreign countries. During the first
half of fiscal year 1997, the Company entered the European market through the
acquisition of one of the largest independent funeral homes in Spain, and
expanded its presence in New Zealand and Australia with the acquisition of
another 12 funeral homes there. The Company will continue to explore expansion
opportunities in foreign countries, although it expects most of its expansion
to continue to occur domestically, with its primary focus on the midwestern
and western United States.
Because combined operations and individual funeral homes typically produce
higher profit margins and cash flow than individual cemetery operations, the
Company seeks primarily to acquire combined operations, premier cemeteries on
or adjacent to which it can build and operate a funeral home, or individual
funeral homes and cemeteries that form the basis for or strengthen a cluster
of death care facilities. Of the Company's 125 cemeteries, 53 are combined
operations.
OPERATIONS
Funeral Operations. The Company's funeral homes offer a complete range of
services to meet families' funeral needs, including prearrangement, family
consultation, the sale of caskets and related funeral products, the removal
and preparation of remains, the use of funeral home facilities for visitation
and worship, and transportation services. Most of the Company's funeral homes
have a non-denominational chapel on the premises, thereby permitting family
visitation and religious services to take place at one location, which reduces
transportation costs to the Company and inconvenience to the family.
In addition to traditional services, substantially all of the Company's
funeral homes offer cremation, which has become more common in the United
States in recent years. For the year ended October 31, 1996, cremations
accounted for approximately 21% of funeral services performed by the Company
in the United States. In Australia, New Zealand and Mexico, cremations
accounted for 63%, 71% and 46%, respectively, of funeral services performed by
the Company for the year ended October 31, 1996. In the fourth quarter of
fiscal year 1996, the Company entered two Canadian markets with the
acquisition of the Urgel Bourgie firm; historically, cremations have accounted
for approximately 50% of the funeral services performed by Urgel Bourgie. In
the second quarter of fiscal year 1997, the Company entered the European
market through the acquisition of one of the largest independent funeral homes
in Spain; historically, cremations have accounted for approximately 14% of the
funeral services performed by that funeral home. While cremations within the
United States often result in lower average revenue when compared to
traditional funeral services, they generally produce higher gross profit
margins than traditional funeral services. In the Company's foreign markets,
cremations generally produce revenues comparable to those of traditional
funeral services in those markets.
In addition to at-need sales, the Company markets funeral merchandise and
services as well as cemetery property and merchandise on a prearranged basis
through a staff of approximately 3,000 commission sales counselors.
Prearranged funeral plans enable families to establish in advance the type of
service to be performed, the products to be used and the cost of such products
and services in accordance with prices prevailing at the time the agreement is
signed rather than when the products and services are delivered. Prearranged
funeral plans permit families to eliminate the emotional strain of making
death care plans at the time of need. The Company believes that extensive
marketing of prearranged products and services produces a backlog of future
business and builds current and future market share. The Company sold 37,545
prearranged funeral services during the fiscal year ended October 31, 1996 and
19,873 during the first half of fiscal year 1997. At April 30, 1997, the
Company had a backlog of 336,211 prearranged funeral services expected to be
delivered some time in the future.
12
<PAGE>
Prearranged funeral plans generally are financed either through trust funds
or escrow accounts established by the Company, or through insurance. The
Company's selection of trust funds, escrow accounts or insurance depends
primarily on the regulatory requirements of each jurisdiction in which it
operates. In the case of trust- or escrow-funded plans, local law or contracts
with customers often require that all or a portion of the payments received by
the Company for prearranged funeral plans be placed in trust funds or escrow
accounts established by the Company. In certain jurisdictions where trust or
escrow arrangements are neither statutorily nor contractually required, the
Company typically deposits on a voluntary basis a portion of the payments
received into escrow accounts to fund the future delivery of prearranged
funeral plans.
Prearranged funeral trust funds and escrow accounts, which amounted to
approximately $399.0 million at April 30, 1997, are designed to provide
funding for the future delivery of prearranged funeral services sold by the
Company. When a prearranged funeral is funded through a trust fund or escrow
account, generally a percentage of the sale price, which is often paid in
installments, is retained by the Company to defray costs related to the sale,
and the remainder is placed in a trust fund or escrow account. The percentage
of the sale price placed in trust funds or in escrow accounts varies among the
different jurisdictions in which the Company operates.
The Company does not recognize revenue from the sale of prearranged funeral
services until delivery. The Company does not recognize revenue from sales of
prearranged funeral merchandise until delivery in jurisdictions where such
sales are revocable by the customer; where such sales are not revocable,
revenue is recognized currently. The Company recognizes as revenue on a
current basis all dividends and interest earned, and net capital gains
realized, by all prearranged funeral trust funds and escrow accounts except in
those jurisdictions where earnings revert to the customer if a prearranged
funeral service contract is canceled. Principal and earnings are withdrawn
only as funeral services are delivered or contracts are canceled, except in
jurisdictions that permit earnings to be withdrawn currently and in
unregulated jurisdictions where escrow accounts are used.
Funeral operations accounted for approximately 52% of the Company's revenues
during the fiscal year ended October 31, 1996 and 57% during the six months
ended April 30, 1997.
Cemetery Operations. The Company's cemetery operations involve the sale of
cemetery property and related cemetery merchandise, which includes lots, lawn
crypts, family and community mausoleums, monuments, memorials and burial
vaults, and interment services. Cemetery property and merchandise sales are
made at the time of need or on a prearranged basis. Prearranged sales
generally are financed by the Company through installment sale contracts, the
terms of which generally range from one to seven years. Prearranged sales
represented approximately 61% of cemetery revenue during the fiscal year ended
October 31, 1996.
Prearranged cemetery merchandise trust funds and escrow accounts, which
amounted to approximately $122.9 million at April 30, 1997, are designed to
provide funding for the future delivery of the prearranged merchandise sold by
the Company and are established in most of the jurisdictions in which the
Company operates. In certain jurisdictions, local law or contracts with
customers generally require that a portion of the sale price received be
placed in trust funds or escrow accounts; however, in other jurisdictions
where trust or escrow arrangements are neither statutorily nor contractually
required, the Company typically makes deposits on a voluntary basis into
escrow accounts. The Company recognizes as revenue on a current basis all
dividends and interest earned, and net capital gains realized, by prearranged
merchandise trust funds or escrow accounts. At the same time, the liability
for the estimated cost to deliver merchandise is adjusted through a charge to
earnings to reflect inflationary merchandise cost increases. The principal and
earnings are withdrawn only as the merchandise is delivered or contracts are
canceled.
13
<PAGE>
The Company also provides maintenance of cemetery grounds pursuant to
perpetual care contracts and laws, or on a voluntary basis where trust or
escrow arrangements are neither contractually nor statutorily required, by
placing a portion, generally 10%, of the proceeds from cemetery property sales
into perpetual care trust funds or escrow accounts. The income from these
funds, which have been established in most jurisdictions in which the Company
operates cemeteries, is used for maintenance of those cemeteries, but
principal, including in some jurisdictions net realized capital gains,
generally must be held in perpetuity. The Company recognizes and withdraws
currently all dividend and interest income earned and, where permitted, net
capital gains realized by perpetual care funds. Perpetual care trust funds and
escrow accounts amounted to $146.5 million at April 30, 1997.
Cemetery operations accounted for 48% of the Company's revenues during the
fiscal year ended October 31, 1996 and 43% during the six months ended April
30, 1997.
Combined Funeral and Cemetery Operations. Of the Company's 125 cemeteries,
53 are combined operations, including nine developed by the Company from
October 1991 through June 1997 through the construction of funeral homes on
the grounds of Company-owned cemeteries. Many of these facilities are in the
Company's key markets, including New Orleans, Louisiana; Dallas, Fort Worth
and Houston, Texas; Miami, Orlando, Tampa and St. Petersburg, Florida;
Nashville and Knoxville, Tennessee; Mobile, Alabama; Baltimore, Maryland;
Philadelphia, Pennsylvania; Portland, Oregon; Los Angeles and San Francisco,
California; Santa Fe, New Mexico; and Washington, D.C.
The Company began to develop and acquire combined facilities in 1979 because
it believed that the operation of such facilities would permit it to increase
market share through the delivery of better and more convenient services at
competitive prices. Although profit margins of cemetery operations typically
are lower than those of funeral homes, the Company's experience with combined
operations has demonstrated that the combination of a cemetery with a funeral
home can increase significantly the market share of the cemetery and funeral
home, thereby increasing the overall profitability of both. The enhanced
purchasing power, more sophisticated management systems and sharing of
facilities, personnel and equipment made possible by integration and combined
facilities results in lower average operating costs to the Company and allows
the Company to offer families the convenience of complete funeral home and
cemetery planning and services from a single supplier at a competitive price.
Foreign Operations. Since the Company first entered foreign markets in the
fourth quarter of fiscal year 1994, the Company has acquired a total of 151
funeral homes and cemeteries in Mexico, Australia, New Zealand, Canada and
Spain. The Company's foreign operations generated approximately 10% of total
revenues during the year ended October 31, 1996 and 15% during the first half
of fiscal year 1997. In addition, foreign operations accounted for
approximately 34% of the Company's funeral homes and cemetery locations and
approximately 18% of consolidated total assets as of October 31, 1996. See
Note 13 to the consolidated financial statements included in Item 8 of the
Company's Form 10-K for the year ended October 31, 1996.
In addition to the risks generally associated with foreign operations,
fluctuations in the value of the foreign currency of the country in which the
Company operates relative to the U.S. dollar can affect the value, in U.S.
dollar terms, of the earnings derived from the foreign operations and can
result in foreign currency translation adjustments that affect the Company's
shareholders' equity or, in the case of operations in highly inflationary
economies, net earnings. Based on the three-year cumulative inflation rate in
Mexico as of October 31, 1996, the Company was required, during the first
quarter of fiscal year 1997, to change its method of reporting foreign
currency translation adjustments for its Mexican operations to the method
prescribed for highly inflationary economies. As a result, foreign currency
translation adjustments for the Company's Mexican operations for the first
half of fiscal year 1997 were reflected in results of operations, instead of
in shareholders' equity. Management does not expect this change to have a
material effect on the Company's results of operations for fiscal year 1997.
There can be no assurance that expansion into foreign markets will yield
results comparable to those realized as a result of the Company's expansion in
the United States.
14
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements made herein that are not historical facts are intended to
be forward-looking statements within the meaning of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company's actual
results could differ materially due to several important factors including the
following: the Company's ability to sustain recent levels of acquisition
activity and enter new markets; the economy, death rate and competition in the
Company's markets; financial market conditions, including stock and bond
prices and interest rates; the Company's ability to achieve economies of scale
and manage growth; and the performance of acquired businesses. Such factors,
and others, are more fully described in Item 5 of the Company's Form 10-Q for
the quarter ended April 30, 1997.
SELLING SHAREHOLDERS
Of the 4,750,000 shares of Class A Common Stock offered hereby, 4,250,000
are being sold by the Company, 150,000 shares are being sold by Frank B.
Stewart, Jr., the Chairman of the Board of the Company, and 350,000 shares are
being sold by the Frank B. Stewart, Jr. Charitable Remainder Unitrust, a trust
established by Mr. and Mrs. Stewart (the "Trust"). At May 21, 1997, Mr.
Stewart beneficially owned 4,372,148 shares of Class A Common Stock, or
approximately 10.8% of the Class A Common Stock outstanding, and after
completion of the offering, Mr. Stewart will own 3,872,148 shares of Class A
Common Stock, or approximately 8.7% of the Class A Common Stock outstanding.
The Trust currently owns 350,000 shares of Class A Common Stock and after
completion of the Offering will own no such shares.
Additionally, Mr. Stewart owns all of the 1,777,510 shares of Class B Common
Stock outstanding and will continue to own such shares after completion of the
offering. By virtue of his ownership of Class A and Class B Common Stock, at
May 21, 1997, Mr. Stewart held approximately 38.0% of the total voting power
of the Company. Mr. Stewart will continue to hold approximately 34.6% of such
voting power after completion of this offering.
15
<PAGE>
UNDERWRITING
The Underwriters of the offering of the Class A Common Stock (the
"Underwriters"), for whom Bear, Stearns & Co. Inc., Goldman, Sachs & Co., ABN
AMRO Chicago Corporation, and Johnson Rice & Company L.L.C. are acting as
representatives (collectively, the "Representatives"), have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company and the Selling Shareholders the number of shares of Class A
Common Stock set forth opposite their respective names below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Bear, Stearns & Co. Inc.........................................
Goldman, Sachs & Co.............................................
ABN AMRO Chicago Corporation....................................
Johnson Rice & Company L.L.C....................................
---------
Total......................................................... 4,750,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that, if any of the foregoing
shares of Class A Common Stock are purchased by the Underwriters pursuant to
the Underwriting Agreement, all such shares must be so purchased. The Company
and the Selling Shareholders have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in
respect thereof.
The Company and the Selling Shareholders have been advised that the
Underwriters propose to offer the shares of Class A Common Stock to the public
initially at the public offering price set forth on the cover page of this
Prospectus and to certain selected dealers (who may include the Underwriters)
at such public offering price less a concession not to exceed $ per share.
The selected dealers may reallow a concession to certain other dealers not to
exceed $ per share. After the initial offering to the public, the public
offering price, the concession to selected dealers and the reallowance to
other dealers may be changed by the Representatives.
The Company has granted to the Underwriters an option to purchase up to
712,500 additional shares of Class A Common Stock at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus, solely for the purpose of covering over-allotments, if any.
Such option may be exercised at any time until 30 days after the date of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will be committed, subject to certain conditions, to purchase
a number of additional shares proportionate to such Underwriter's initial
commitment as indicated in the preceding table.
In order to facilitate the offering, certain persons participating in the
offering may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A Common Stock during and after the offering.
Specifically, the Underwriters may over-allot or otherwise create a short
position in the Class A Common Stock for their own account by selling more
shares of Class A Common Stock than have been sold to them by the Company and
the Selling Shareholders. The Underwriters may elect to cover any such short
position by purchasing shares of Class A Common Stock in the open market or by
exercising the over-allotment option granted to the Underwriters by the
Company. In addition, such persons may stabilize or maintain the price of the
Class A Common Stock by bidding for or purchasing shares of Class A Common
Stock in the open market and may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-dealers participating
in the offering are reclaimed, if shares of Class A Common Stock previously
distributed in the
16
<PAGE>
offering are repurchased in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the Class A Common Stock at a level above that which might
otherwise prevail in the open market. The imposition of a penalty bid may also
affect the price of the Class A Common Stock to the extent that it discourages
resales thereof. No representation is made as to the magnitude or effect of
any such stabilization or other transactions. Such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
In connection with the offering, the Company and its directors and executive
officers, beneficially owning in the aggregate approximately 14.8% of the
Class A Common Stock and 100% of the Class B Common Stock, have agreed that
they will not sell, contract to sell or otherwise dispose of any shares of
capital stock of the Company for a period of 90 days after the date of this
Prospectus without the prior written consent of the Underwriters, except for
the shares offered hereby, issuances or sales by the Company upon the exercise
of outstanding stock options, grants of employee stock options, or issuances
or sales by the Company in connection with acquisitions.
Michael O. Read, a director of the Company, is a brother-in-law of a partner
of Johnson Rice & Company L.L.C., one of the Underwriters. Johnson Rice &
Company L.L.C. will be paid a portion of the underwriting discounts and
commissions in connection with this offering. Certain of the Underwriters have
engaged in transactions with and performed various investment banking and
other services for the Company in the past, and may do so from time to time in
the future.
ABN AMRO Chicago Corporation is an affiliate of ABN AMRO Bank, N.V. ("ABN
AMRO"), which is a lender to the Company under the $600 million revolving line
of credit. ABN AMRO will receive its proportionate share of any repayment by
the Company of amounts outstanding under such line of credit from the proceeds
of the offering of the Class A Common Stock offered hereby by the Company. In
addition, ABN AMRO or its affiliates participate from time to time in various
general financing and banking transactions for the Company and its affiliates.
LEGAL MATTERS
The validity of the Class A Common Stock offered hereby will be passed upon
for the Company by Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., New Orleans, Louisiana. Certain legal matters in connection with this
offering will be passed upon for the Underwriters by Jenkens & Gilchrist, a
Professional Corporation, Dallas, Texas.
INDEPENDENT ACCOUNTANTS
The audited consolidated financial statements and financial statement
schedule of the Company incorporated by reference in this Registration
Statement have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of such firm
as experts in accounting and auditing.
17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLD-
ERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDIC-
TION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. UNDER NO CIR-
CUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT TO
THIS PROSPECTUS CREATE ANY IMPLICATION THAT INFORMATION CONTAINED IN THIS PRO-
SPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
Prospectus Summary......................................................... 3
Use of Proceeds............................................................ 7
Price Range of Common Stock
and Dividend Policy....................................................... 8
Capitalization............................................................. 9
Business................................................................... 10
Selling Shareholders....................................................... 15
Underwriting............................................................... 16
Legal Matters.............................................................. 17
Independent Accountants.................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4,750,000 SHARES
LOGO
[LOGO OF STEWART ENTERPRISES APPEARS HERE]
STEWART
ENTERPRISES,
INC.
CLASS A
COMMON STOCK
---------------
PROSPECTUS
---------------
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO CHICAGO CORPORATION
JOHNSON RICE & COMPANY L.L.C.
June , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated fees and expenses payable by the Company and the Selling
Shareholders in connection with the issuance and distribution of the Class A
Common Stock registered hereunder are as follows:
<TABLE>
<S> <C>
Registration Fee................................................ $ 60,729
Nasdaq Listing Fee.............................................. 17,500
Printing and Engraving.......................................... 25,000
Legal Fees and Expenses......................................... 100,000
Accounting Fees and Expenses.................................... 45,000
Blue Sky Fees and Expenses...................................... 5,000
Transfer Agent.................................................. 1,500
Miscellaneous................................................... 20,271
--------
Total......................................................... $275,000
========
</TABLE>
The Selling Shareholders will pay approximately $5,559 of the total
estimated expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 83 of the Louisiana Business Corporation Law gives Louisiana
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers; subject to specific conditions and
exclusions gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes Louisiana corporations to buy
directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, authorization of shareholders or otherwise.
The Company's By-laws make mandatory the indemnification of directors and
officers permitted by the Louisiana Business Corporation Law. The standard to
be applied in evaluating any claim for indemnification (excluding claims for
expenses incurred in connection with the successful defense of any proceeding
or matter therein for which indemnification is mandatory without reference to
any such standard) is whether the claimant acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation. With respect to any criminal action or proceeding, the standard
is that the claimant had no reasonable cause to believe the conduct was
unlawful. No indemnification is permitted in respect of any claim, issue or
matter as to which a director or officer shall have been adjudged by a court
of competent jurisdiction to be liable for willful or intentional misconduct
or to have obtained an improper personal benefit, unless, and only to the
extent that the court shall determine upon application that, in view of all
the circumstances of the case, he is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
The Company has in effect a directors' and officers' liability insurance
policy that provides for indemnification of its officers and directors against
losses arising from claims asserted against them in their capacities as
officers and directors, subject to limitations and conditions set forth in
such policy.
The Company has entered into indemnity agreements with each of its directors
and executive officers, pursuant to which the Company has agreed under certain
circumstances to purchase and maintain directors' and officers' liability
insurance, unless such insurance is not reasonably available or, in the
reasonable judgment of the Board of Directors, there is insufficient benefit
to the Company from such insurance. The agreements also provide that the
Company will indemnify each director and executive officer against any costs
and expenses, judgments, settlements and fines incurred in connection with any
claim involving him by reason of his position as director or officer that are
in excess of the coverage provided by any such insurance, provided that he
meets certain standards of conduct.
II-1
<PAGE>
The Underwriters have also agreed to indemnify the directors and certain of
the Company's officers against certain liabilities under the Securities Act of
1933, as amended, or to contribute to payments that such directors and
officers may be required to make in respect thereof.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 --Form of Underwriting Agreement.*
4.1 --Specimen of Class A Common Stock certificate (incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-42336) filed
with the Commission on October 7, 1991).
4.2 --Credit Agreement by and among the Company, its subsidiaries and
Citicorp USA, Inc., Bank of America Illinois, and NationsBank of Texas,
N.A. dated April 14, 1997.**
4.3 --Amended and Restated Articles of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31, 1996).
4.4 --By-laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1995).
5 --Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.**
23.1 --Consent of Coopers & Lybrand L.L.P.*
23.2 --Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. (included in Exhibit 5).**
24 --Power of Attorney.**
</TABLE>
- ----------------
* Refiled with this Amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under
II-2
<PAGE>
the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New Orleans, State of Louisiana, on
June 17, 1997.
STEWART ENTERPRISES, INC.
/s/ Joseph P. Henican, III
By:__________________________________
Joseph P. Henican, III
Chief Executive Officer and
Vice Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board
____________________________________
Frank B. Stewart, Jr.
/s/ Joseph P. Henican, III Chief Executive Officer and June 17, 1997
____________________________________ Vice Chairman of the Board
Joseph P. Henican, III (Principal Executive
Officer)
* President, Chief Operating
____________________________________ Officer and Director
William E. Rowe
* Chief Financial Officer,
____________________________________ President--Corporate
Ronald H. Patron Division, Executive Vice
President and Director
(Principal Financial
Officer)
* Senior Vice President--
____________________________________ Finance, Secretary and
Kenneth C. Budde Treasurer (Principal
Accounting Officer)
* Director
____________________________________
Darwin C. Fenner
Director
____________________________________
John P. Laborde
Director
____________________________________
James W. McFarland
* Director
____________________________________
Michael O. Read
</TABLE>
/s/ Joseph P. Henican, III
*By:___________________________ June 17,
Joseph P. Henican, III 1997
Attorney-in-fact
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1 --Form of Underwriting Agreement.*
4.1 --Specimen of Class A Common Stock certificate (incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-42336)
filed with the Commission on October 7, 1991).
4.2 --Credit Agreement by and among the Company, its subsidiaries and
Citicorp USA, Inc., Bank of America Illinois, and NationsBank of
Texas, N.A. dated April 14, 1997.**
4.3 --Amended and Restated Articles of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31,
1996).
4.4 --By-laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995).
5 --Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.**
23.1 --Consent of Coopers & Lybrand L.L.P.*
23.2 --Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. (included in Exhibit 5).**
24 --Power of Attorney**
</TABLE>
- ----------------
* Refiled with the Amendment.
** Previously filed.
<PAGE>
EXHIBIT 1
4,750,000 Shares of Class A Common Stock
STEWART ENTERPRISES, INC.
UNDERWRITING AGREEMENT
----------------------
June , 1997
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO CHICAGO CORPORATION
JOHNSON RICE & COMPANY L.L.C.
As Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
Stewart Enterprises, Inc., a Louisiana corporation (the "Company"),
proposes to issue and sell to the Underwriters named in SCHEDULE I hereto (the
"Underwriters") 4,250,000 shares of Class A Common Stock, no par value per
share, of the Company (the "Class A Common Stock"), and Frank B. Stewart, Jr.
("Stewart") and the Frank B. Stewart, Jr. Charitable Remainder Unitrust (the
"Trust") (each a "Selling Shareholder" and, collectively, the "Selling
Shareholders"), propose to sell to the Underwriters an additional 150,000 shares
and 350,000 shares, respectively, of Class A Common Stock, which aggregate of
4,750,000 shares of Class A Common Stock is herein referred to as the "Firm
Shares." In addition, for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, the Company proposes to issue and
sell to the Underwriters, at the option of the Underwriters, up to an additional
712,500 shares of Class A Common Stock (the "Additional Shares"). The Firm
Shares and any Additional Shares purchased by the Underwriters are herein
referred to as the "Shares." The Shares are more fully described in the
Registration Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
A. The Company represents and warrants to, and agrees with, the several
Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-3 (No. 333-27771), for the
registration of the Shares under the Securities Act of 1933, as amended
(the "Act"). The Company will not, without your prior consent, file any
other amendment thereto or make any change in the form of final prospectus
included therein prior to the time it is first filed pursuant to Rule
424(b) of the General Rules and Regulations of the Commission under the Act
(the "Regulations"). Such registration statement, including the prospectus,
financial statements, schedules, exhibits and all other documents filed as
a part thereof, as amended, when it shall become effective, is herein
called the "Registration Statement" and shall include information with
respect to the Shares and the offering permitted to be omitted from the
Registration Statement
<PAGE>
when it becomes effective pursuant to Rule 430A or Rule 434 of the Regulations;
and the prospectus, in the form included as part of the Registration Statement,
or, if different, in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations, is herein called the "Prospectus." The term
"preliminary prospectus" as used herein means each prospectus included in the
Registration Statement or any amendments thereto, before it became effective
under the Act and any prospectus filed with the Commission pursuant to Rule
424(a) of the Regulations. Any reference herein to the Registration Statement,
any preliminary prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3, which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), on or before the effective date of the Registration
Statement, the date of such preliminary prospectus or the date of the
Prospectus, as the case may be, and any reference herein to the terms "amend",
"amendment", or "supplement" with respect to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
(i) the filing of any document under the Exchange Act after the effective date
of the Registration Statement, the date of such preliminary prospectus or the
date of the Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed.
(b) When the Registration Statement shall become effective, when any
amendment to the Registration Statement becomes effective, when the Prospectus
is first filed with the Commission pursuant to Rule 424(b) of the Regulations,
when any supplement to or amendment of the Prospectus is filed with the
Commission, when any document filed under the Exchange Act is filed, and at all
times subsequent thereto and including the Closing Date and the Additional
Closing Date, if any (as hereinafter respectively defined), and during such
longer period as the Prospectus may be required to be delivered in connection
with sales by the Underwriters or a dealer, the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto complied or will
comply in all material respects with the applicable provisions of the Act and
the Exchange Act and the respective rules and regulations thereunder and will
contain all statements that are required to be stated therein in accordance with
the Act and the Regulations, and does not or will not contain an untrue
statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and no event will have occurred that should have been
set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not then been set forth in such an amendment or supplement.
When any related preliminary prospectus was first filed with the Commission
(whether filed as part of the registration statement for the registration of the
Shares or any amendment thereto or pursuant to Rule 424(a) of the Regulations)
and when any amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus and any amendments thereof and
supplements thereto complied in all material respects with the applicable
provisions of the Act and the Exchange Act and the respective rules and
regulations thereunder and did not contain an untrue statement of a material
fact and did not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. No
representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related preliminary prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through you as herein stated, or by or on behalf of either of the
Selling Shareholders insofar as it relates to such Selling Shareholders, in each
case expressly for use in connection with the preparation thereof. The documents
incorporated by reference in the Registration Statement and the Prospectus, when
they were first filed with the Commission, complied in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
of the Commission thereunder.
(c) Neither the Commission nor the Blue Sky or securities authority of
any jurisdiction has issued a stop order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness of the Registration
Statement, or suspending the registration or qualification of the Shares, nor,
to the knowledge of the Company, has any of such authorities instituted or
threatened to institute any proceedings with respect to a stop order.
(d) To the best knowledge of the Company, Coopers & Lybrand L.L.P., who
have certified the financial statements and supporting schedules, if any,
included in the Registration Statement or incorporated by reference, are
independent public accountants with regard to the Company as required by the Act
and the Regulations.
2
<PAGE>
(e) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has not been any material
adverse change or any development involving a material adverse change, in the
business, properties, financial condition, results of operations or prospects of
the Company and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, and since the date of the
latest balance sheet presented or incorporated by reference in the Registration
Statement and the Prospectus, neither the Company nor any of its subsidiaries
has incurred or undertaken any liabilities or obligations, direct or contingent,
which are material to the Company and its subsidiaries taken as a whole, except
for liabilities or obligations that were incurred or undertaken in the ordinary
course of business or are reflected in the Registration Statement and the
Prospectus.
(f) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and perform its obligations hereunder; this Agreement
and the transactions contemplated herein have been duly and validly authorized,
executed and delivered by the Company and is a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that rights to indemnity hereunder may be limited by
federal or state securities laws or the public policy underlying such laws and
except to the extent that enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and subject
to general principles of equity.
(g) The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) or require consent under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries, pursuant to the terms of any agreement,
instrument, franchise, license or permit to which the Company or any of its
subsidiaries is a party or by which any of such corporations or their respective
properties or assets may be bound, or (ii) violate or conflict with any
provision of the Articles of Incorporation or Bylaws of the Company or similar
organizational documents of any of its subsidiaries or any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Shares to
be issued, sold and delivered by the Company hereunder, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(h) All of the outstanding shares of capital stock of the Company are duly
and validly authorized and issued, are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights. The Company had an
authorized and outstanding capitalization at January 31, 1997 as set forth in
the preliminary prospectus dated June 9, 1997 and at April 30, 1997 as set forth
in the Registration Statement and the Prospectus. The Shares to be sold by the
Company, when delivered and sold in accordance with this Agreement will be duly
and validly issued and outstanding, fully paid and nonassessable, and will not
have been issued in violation of or subject to any preemptive rights. None of
such Shares when delivered will be subject to any lien, claim, encumbrance,
restriction or any other claim of any third party. The Class A Common Stock, the
Firm Shares and the Additional Shares conform to the descriptions thereof
contained or incorporated by reference in the Registration Statement and the
Prospectus.
(i) Each of the Company and its subsidiaries has been duly organized and is
validly existing as a corporation or partnership in good standing under the laws
of its jurisdiction of incorporation or organization. Each of the Company and
its subsidiaries is duly qualified and in good standing as a foreign corporation
or partnership in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or in good standing which will not in the aggregate have a material adverse
effect on the business, properties, financial condition, results of operations
or prospects of the Company and its subsidiaries taken as
3
<PAGE>
a whole. Each of the Company and its subsidiaries has all requisite power and
authority, and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from any public,
regulatory or governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus, and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus.
(j) Neither the Company nor any of its subsidiaries (i) is in violation of
its corporate charter or bylaws or other similar organizational documents, (ii)
is in default under any lease, license, indenture, mortgage, deed of trust,
note, bank loan or other evidence of indebtedness or any other agreement,
understanding or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary or any property of the
Company or any of such subsidiary may be bound or affected, which default may
have a material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its subsidiaries taken as
a whole, or (iii) is in violation of any law, ordinance, governmental rule or
regulation or court decree to which it may be subject or has failed to obtain
any license, permit, certificate, franchise or other governmental authorization
or permit necessary to the ownership of its property or to the conduct of its
business, which violation or failure may have a material adverse effect on the
business, properties, financial condition, results of operations or prospects of
the Company and its subsidiaries taken as a whole.
(k) Except as described in the Registration Statement and the Prospectus,
and any documents incorporated by reference therein (including the notes to the
financial statements included or incorporated by reference therein), there are
no outstanding warrants or options to purchase any shares of the capital stock
of the Company and there are no preemptive or other rights to subscribe for or
to purchase, and no restrictions upon, any Class A Common Stock pursuant to the
Company's Articles of Incorporation or Bylaws or any agreement or other
instrument to which the Company is a party or by which it is bound.
(l) There is no litigation or proceeding pending or, to the knowledge of
the Company, threatened, before or by any court or government agency, authority
or body, or any arbitrator against the Company or any of its subsidiaries that
(i) could reasonably be expected to have a material adverse effect on the
business, properties, financial condition, results of operations or prospects of
the Company and its subsidiaries taken as a whole, or (ii) is required to be
disclosed in the Registration Statement or the Prospectus and is not so
disclosed and adequately summarized therein.
(m) The financial statements (including the related notes and supporting
schedules) included in the Registration Statement and the preliminary prospectus
or the Prospectus, or incorporated by reference therein, present fairly in
accordance with generally accepted accounting principles the financial condition
and results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved.
(n) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries, on the one hand, and the directors, officers
or shareholders of the Company or any of its subsidiaries, on the other hand,
which is required by the Act or by the Regulations to be described in the
Registration Statement and the Prospectus that is not so described or is not
adequately described.
(o) There are no contracts or other documents that are required to be filed
as exhibits to the Registration Statement by the Act or by the Regulations that
have not been filed as exhibits to the Registration Statement, or that are
required to be summarized in the Prospectus that are not so summarized or are
not adequately summarized.
(p) No person has the right to request or require the Company or any of its
subsidiaries to register any capital stock for offering and sale under the Act
whether by reason of the filing of the Registration Statement with the
Commission or the issue and sale of the Shares or otherwise.
4
<PAGE>
(q) The Company has not taken and shall not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or that might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Class A Common Stock to facilitate the sale or resale of
the Shares.
(r) The Class A Common Stock is quoted on the Nasdaq National Market.
(s) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(t) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
B. Each Selling Shareholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(a) The execution, delivery and performance of this Agreement by such
Selling Shareholder and the consummation of the transactions contemplated hereby
will not (i) conflict with or result in the breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) or require consent under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of such Selling Shareholder pursuant to the terms of any
agreement, instrument (including in the case of the Trust, the declaration of
trust for the Trust), franchise, license or permit to which such Selling
Shareholder is a party or by which such Selling Shareholder or any of such
Selling Shareholder's property or assets may be bound, or (ii) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Shareholder or such Selling Shareholder's
property or assets.
(b) Such Selling Shareholder has, and at the time of delivery of the Shares
to be sold by such Selling Shareholder such Selling Shareholder will have, full
legal right, power, authority and capacity, and, except as required under the
Act and state securities and Blue Sky laws, all necessary consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies and bodies,
as are required for the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated hereby, including the
sale, assignment, transfer and delivery of the Shares to be sold, assigned,
transferred and delivered by such Selling Shareholder hereunder.
(c) This Agreement has been duly and validly authorized, executed and
delivered by such Selling Shareholder and is a valid and binding obligation of
such Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except to the extent that rights to indemnity
hereunder may be limited by applicable federal or state securities laws or the
public policy underlying such laws and except to the extent that enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and subject to general principles of equity.
(d) Such Selling Shareholder has good, valid and marketable title to the
Shares to be sold by such Selling Shareholder pursuant to this Agreement, free
and clear of all liens, encumbrances, claims, security interests, restrictions
on transfer, shareholders' agreements, voting trusts and other defects in title
whatsoever, with full power to deliver such Shares hereunder, and, upon the
delivery of and payment for such Shares as herein contemplated, each of the
Underwriters will receive good, valid and marketable title to the Shares
purchased by it from such Selling Shareholder, free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer,
shareholders' agreements, voting trusts and other defects in title whatsoever.
(e) Such Selling Shareholder has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or that might reasonably
be expected to constitute the stabilization or manipulation of the price of the
shares of Class A Common Stock to facilitate the sale or resale of the Shares.
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(f) When the Registration Statement shall become effective, when any
amendment to the Registration Statement becomes effective, when the Prospectus
is first filed with the Commission pursuant to Rule 424(b) of the Regulations,
when any amendment of or supplement to the Prospectus is filed with the
Commission and at all times subsequent thereto and including the Closing Date,
and during such longer periods as the Prospectus may be required to be delivered
in connection with sales by the Underwriters or a dealer, such parts of the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto as relate to such Selling Shareholder and are based upon
information furnished in writing to the Company or the Underwriters by or on
behalf of such Selling Shareholder expressly for use therein will not contain an
untrue statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and no event will have occurred with respect to such
Selling Shareholder that should have been set forth in an amendment or
supplement to the Registration Statement or Prospectus that has not then been
set forth in such an amendment or supplement; and when any related preliminary
prospectus was first filed with the Commission (whether filed as part of the
registration statement for the registration of the Shares or any amendment
thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment
thereof or supplement thereto was first filed with the Commission, such parts of
such preliminary prospectus and any amendments thereof and supplements thereto
as relate to such Selling Shareholder and are based on information furnished in
writing to the Company or the Underwriters by or on behalf of such Selling
Shareholder expressly for use therein did not contain an untrue statement of a
material fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) The information pertaining to such Selling Shareholder under the
caption "Selling Shareholders" in the Prospectus is complete and accurate.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby agrees to sell to the several Underwriters 4,250,000
of the Firm Shares, Stewart hereby agrees to sell to the several Underwriters
150,000 of the Firm Shares and the Trust hereby agrees to sell to the several
Underwriters 350,000 of the Firm Shares; and each Underwriter, severally and not
jointly, agrees to purchase the number of shares of the Firm Shares set forth
opposite that Underwriter's name in SCHEDULE I hereto, at $_____ per share. Each
Underwriter shall be obligated to purchase from the Company, and the Selling
Shareholders, that number of the Firm Shares which represents the same
proportion of the number of the Firm Shares to be sold by the Company and the
Selling Shareholders as the number of shares of the Firm Shares set forth
opposite the name of such Underwriter in SCHEDULE I represents of the total
number of shares of the Firm Shares to be purchased by all of the Underwriters
pursuant to this Agreement. The respective purchase obligations of the
Underwriters with respect to the Firm Shares shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
Delivery of certificates, and payment of the purchase price, for the Firm
Shares shall be made at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167, or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 10:00 a.m., New York
time, on the third or fourth business day (as permitted under Rule 15c6-1 of the
Exchange Act) following the determination of the initial public offering price
pursuant to this SECTION 2 (unless such time and date are postponed in
accordance with the provisions of SECTION 9 hereof), or at such other time as
shall be agreed upon by you, the Selling Shareholders and the Company. The time
and date of such delivery and payment are herein called the "Closing Date."
Delivery of the certificates for the Firm Shares shall be made to you for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price for the Firm
Shares to the order of the Company and the Selling Shareholders by certified or
official bank checks payable in New York Clearing House next-day funds.
Certificates for the Firm Shares shall be registered in such name or names
and in such authorized denominations as you may request in writing at least two
full business days prior to the Closing Date. The Company and the Selling
Shareholders will permit you to examine and package such certificates for
delivery at least one full business day prior to the Closing Date.
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(b) In addition, the Company hereby grants to the several Underwriters the
option to purchase up to 712,500 Additional Shares at the same purchase price
per share to be paid by the several Underwriters to the Company for the Firm
Shares as set forth in this SECTION 2, for the sole purpose of covering over-
allotments in the sale of Firm Shares by the several Underwriters. This option
may be exercised at any time (but not more than once), in whole or in part, on
or before the thirtieth day following the date of the Prospectus, by written
notice by you to the Company. Such notice shall set forth the aggregate number
of Additional Shares as to which the option is being exercised and the date and
time, as reasonably determined by you, when the Additional Shares are to be
delivered (such date and time being herein sometimes referred to as the
"Additional Closing Date"); provided, however, that the Additional Closing Date
shall not be earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in accordance with
the provisions of SECTION 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to the
Additional Closing Date. The Company will permit you to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be the
number that bears the same relationship to the aggregate number of Additional
Shares being purchased by the Underwriters, as the number of Firm Shares set
forth opposite the name of such Underwriter in SCHEDULE I hereto (or such number
increased as set forth in SECTION 9 hereof), bears to the aggregate number of
Firm Shares being purchased hereby, subject, however, to such adjustments to
eliminate any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by certified or official
bank check or checks, in New York Clearing House next-day funds, payable to the
order of the Company at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167, or such other location as may be mutually
acceptable, upon delivery of the certificates for the Additional Shares to you
for the respective accounts of the Underwriters.
3. OFFERING. Upon your authorization of the release of the Firm
Shares, the several Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
A. The Company covenants and agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereto to become effective as promptly as possible
and will notify you immediately (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (iv) of the receipt of any comments from the
Commission, and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus before or after the
effective date of the Registration Statement to which you shall reasonably
object in writing after being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any
time to amend or supplement the Prospectus or Registration Statement to comply
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with the Act or the Regulations, or to file under the Exchange Act so as to
comply therewith any document incorporated by reference in the Registration
Statement or the Prospectus or in any amendment thereof or supplement thereto,
the Company will notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to you)
that will correct such statement or omission or which will effect such
compliance and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you two signed copies of the
Registration Statement, including exhibits and all documents incorporated by
reference therein, and all amendments thereto, and the Company will promptly
deliver to each of the several Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and the Prospectus or
any amendment thereof or supplement thereto, without exhibits, as you may
reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to qualify the
Shares for offering and sale under the securities laws relating to the offering
or sale of the Shares in such jurisdictions as you may designate and to maintain
such qualification in effect for so long as required for the distribution
thereof.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary of the effective date of the Registration Statement
occurs (or not later than 90 days after the end of such fiscal quarter if such
fiscal quarter is the last fiscal quarter of the fiscal year), an earnings
statement (which need not be audited but which shall satisfy the provisions of
Section 11(a) of the Act) covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement.
(f) During a period of 90 days from the date of the Prospectus, the Company
will not, without your prior written consent, issue, sell, offer or agree to
sell, or otherwise dispose of, directly or indirectly, any Class A Common Stock
(or any securities convertible into, exercisable for or exchangeable for Class A
Common Stock), and the Company will obtain the under taking of each person who
is an executive officer and/or director as of the date of this Agreement not to
engage in any of the aforementioned transactions on their own behalf, other than
the Company's sale of Shares hereunder, the Company's issuance of Class A Common
Stock upon the exercise of presently outstand ing stock options, grants of
employee options pursuant to the Company's employee stock purchase plan, the
grant of options to directors of the Company as provided in the Company's
director stock option plan and the issuance of shares of Class A Common Stock
upon exercise thereof, and in connection with acquisitions.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to the Representatives, upon
request, copies of (i) all reports to its shareholders, and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange or quotation system upon
which the Class A Common Stock may be listed.
(h) The Company will not take, directly or indirectly, any action that
might reasonably be expected to cause or result in (i) stabilization of the
price of the Class A Common Stock to facilitate the sale or resale of the Class
A Common Stock, or (ii) manipulation of the price of the Class A Common Stock.
(i) The Company will take, and will cause its subsidiaries to take, such
action as may be necessary to comply with the rules and regulations of the
Nasdaq National Market in respect of the offering of the Shares.
(j) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus and will take such steps as
shall be necessary to ensure that neither the Company nor any subsidiary shall
become an "investment company" within the meaning of such term under the
Investment Company Act, and the rules and regulations thereunder.
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B. Each Selling Shareholder severally covenants and agrees with the
several Underwriters that during a period of 90 days from the date of the
Prospectus, such Selling Shareholder will not, without your prior written
consent, sell, offer or agree to sell, or otherwise dispose of, directly or
indirectly, any Class A Common Stock (or any securities convertible into,
exercisable for or exchangeable for Class A Common Stock).
5. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Selling Shareholders hereunder, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement, as originally filed, and all amendments
thereof (including all exhibits thereto), any preliminary prospectus, the
Prospectus and any amendments thereof or supplements thereto, the underwriting
documents (including this Agreement and the Agreement Among Underwriters) and
all other documents related to the public offering of the Shares (including
those supplied to the Underwriters in quantities as hereinabove stated), (ii)
the issuance, transfer and delivery of the Shares to the Underwriters, including
any transfer or other taxes payable thereon, (iii) the qualification of the
Shares under state or foreign securities or Blue Sky laws, including the costs
of printing and mailing a preliminary and final "Blue Sky Survey" and the fees
of counsel for the Underwriters and such counsel's disburse ments in relation
thereto, and (iv) if appropriate, the review of the terms of the public offering
of the Shares by the National Association of Securities Dealers, Inc.; provided,
however, that the Selling Shareholders hereby agree to reimburse the Company for
such expenses as are described as being payable by the Selling Shareholders in
Part II of the Registration Statement.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
herein contained, as of the date hereof and as of the Closing Date (or in the
case of the Additional Shares as of the Additional Closing Date), to the absence
from any certificates, opinions, written statements or letters furnished to you
or to Jenkens & Gilchrist, a Professional Corporation ("Underwriters' Counsel"),
pursuant to this SECTION 6 of any misstatement or omission, to the performance
by the Company and the Selling Shareholders of their respective obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:30 p.m., New York time, on the day following the date of this Agreement or at
such later time and date as shall have been consented to in writing by you, and,
at or prior to the Closing Date and the Additional Closing Date, as the case may
be, no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date and the Additional Closing Date, you shall have
received the opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., counsel for the Company, dated the Closing Date, or the Additional
Closing Date, as the case may be, addressed to the Underwriters and in form and
substance reasonably satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company and its subsidiaries listed on SCHEDULE II
hereto (the "Significant Subsidiaries"), has been duly organized and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and the Significant
Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing that will not in the aggregate have a
material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its subsidiaries,
taken as a whole. Each of the Company and the Significant Subsidiaries has
all requisite corporate authority to own, lease and license its respective
properties and conduct its business as now being conducted and as described
in the Registration Statement and the Prospectus. Except as otherwise
indicated in SCHEDULE II, all of the issued and outstanding capital stock
of each Significant Subsidiary of the Company is held of record by the
Company.
(ii) The Company has authorized capital stock as set forth in the
Registration Statement and the Prospectus. All of the outstanding shares of
capital stock of the Company are duly and validly
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<PAGE>
authorized and issued, are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights. The Shares to
be delivered on the Closing Date, or Additional Closing Date, as the case
may be, have been duly and validly authorized and, when delivered in
accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable and will not have been issued in violation of or subject
to any preemptive rights. Each of the Underwriters will receive good, valid
and marketable title to the Firm Shares and the Additional Shares being
sold by the Company hereunder, free and clear of all liens, encumbrances,
claims, security interests, restrictions on transfer, shareholders'
agreements, voting trusts and other defects of title whatsoever.
(iii) The capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof incorporated by
reference in the Registration Statement and the Prospectus; the
certificates for the Shares are in proper form under Louisiana law.
(iv) The Class A Common Stock is listed on the Nasdaq National Market.
(v) Such counsel does not know of any contracts or other documents that
are required to be filed as exhibits to the Registration Statement by the
Act or by the Regulations that have not been filed as exhibits to the
Registration Statement, or that are required to be summarized in the
Prospectus that are not so summarized.
(vi) To the best of such counsel's knowledge, the Company is not in
violation of its corporate charter or bylaws and neither the Company nor
any of its Significant Subsidiaries is in default under (and no event has
occurred which with notice, lapse of time, or both, would constitute a
breach of, or a default under), any agreement, license, mortgage, deed of
trust, bank loan, credit agreement, indenture or instrument filed as an
exhibit to the Registration Statement (or as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1996 or
Quarterly Reports on Form 10-Q for the quarters ended January 31, 1997 and
April 30, 1997, respectively), which default would have a material adverse
affect on the business, properties, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a
whole.
(vii) The Company has all necessary corporate power to execute and
deliver this Agreement and to perform its obligations (including the
issuance, sale and delivery of the Shares to be sold by the Company)
hereunder.
(viii) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that rights to indemnity hereunder may be limited by
federal or state securities laws or the public policy underlying such laws
and except to the extent that enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and subject to general principles of equity.
(ix) To the best of such counsel's knowledge, there is no litigation or
governmental or other action, suit, proceeding or investigation before any
court or before or by any public, regulatory or governmental agency or body
pending or threatened against, or involving the properties or business of,
the Company or, to the best knowledge of such counsel, any of its
Significant Subsidiaries, which, if resolved against the Company or such
subsidiary, individually or, to the extent involving related claims or
issues, in the aggregate, is of a character required to be disclosed in the
Registration Statement and the Prospectus, which has not been properly
disclosed therein.
(x) The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby by the Company will
not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) or require consent
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Significant Subsidiaries pursuant to the terms of any agreement or
instrument filed as an exhibit to the Registration Statement (or as an
exhibit to the Company's Annual Report on Form 10-K for the
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fiscal year ended October 31, 1996 or Quarterly Reports on Form 10-Q for
the quarters ended January 31, 1997 and April 30, 1997, respectively) or
any material franchise, license or permit known to such counsel to which
the Company or any of its Significant Subsidiaries is a party or by which
any of such corporations or their respective properties or assets may be
bound, or (B) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of the Company or any of its Significant
Subsidiaries, or, to the best knowledge of such counsel, any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its Significant Subsidiaries or any of their respective
properties or assets. To the best knowledge of such counsel, no consent,
approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any public, governmental, or
regulatory agency or body having jurisdiction over the Company or any of
its Significant Subsidiaries or any of their respective properties or
assets is required for the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
except for (1) such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion), and (2)
such as have been made or obtained under the Act.
(xi) The Registration Statement and the Prospectus and any amendments
thereof or supplements thereto (other than the financial statements and
schedules and other financial and statistical data included or incorporated
by reference therein, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and the
Regulations. The documents filed under the Exchange Act and incorporated by
reference in the Registration Statement and the Prospectus and in any
amendment thereof or supplement thereto (other than the financial
statements and schedules and other financial and statistical data included
or incorporated by reference therein, as to which no opinion need be
rendered) comply as to form in all material respects with the Exchange Act
and the rules and regulations of the Commission thereunder.
(xii) The Registration Statement is effective under the Act, and, to the
best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof has
been issued and no proceedings therefor have been initiated or threatened
by the Commission.
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 the Prospectus were discussed and, although such counsel is not
passing upon, and does not assume responsibility for and has not verified, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, on the basis of the foregoing (relying
as to materiality upon the opinions of officers and other representatives of the
Company) and without independent check or verification, nothing has come to the
attention of such counsel that leads it to believe that the Registration
Statement or any amendment thereto at the time such Registration Statement or
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, or that the Prospectus or any
supplement thereto at the date of such Prospectus or such supplement, and at all
times up to and including the Closing Date or the Additional Closing Date, as
the case may be, 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, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus or in any amendments thereof or supplements
thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers
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of departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company and its subsidiaries,
provided that copies of any such statements or certificates shall be delivered
to Underwriters' Counsel. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(c) At the Closing Date you shall have received the favorable opinion of
Henican, James & Cleveland, counsel for the Selling Shareholders, dated the
Closing Date, addressed to the Underwriters and in form and substance reasonably
satisfactory to Underwriters' Counsel, to the effect that:
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Selling Shareholders and is a valid and binding obligation
of each of the Selling Shareholders, enforceable against each of the Selling
Shareholders in accordance with its terms, except to the extent that rights
to indemnity hereunder may be limited by applicable federal or state
securities laws or the public policy underlying such laws and except to the
extent that enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and
subject to general principles of equity.
(ii) To the best knowledge of such counsel, the Selling Shareholders
have all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits of and from all courts and all public, governmental or
regulatory agencies and bodies as are required for the execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, except for (1) such as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution
of the Shares by the Underwriters (as to which such counsel need express no
opinion), and (2) such as have been made or obtained under the Act.
(iii) Upon the delivery of and payment for the Shares to be sold by the
Selling Shareholders pursuant to this Agreement as herein contemplated, each
of the Underwriters who is not aware of any adverse claim with respect
thereto will receive good, valid and marketable title to the Shares purchased
by it from the Selling Shareholders, free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer,
shareholders' agreements, voting trusts and other defects in title
whatsoever.
(iv) The execution, delivery and performance of this Agreement by the
Selling Shareholders and the consummation of the transactions contemplated
hereby will not violate or conflict with, to the best knowledge of such
counsel, any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Selling Shareholders or any of their respective
properties or assets.
(v) The Statements in the Prospectus under the caption "Selling
Shareholders," insofar as such statements constitute a summary of the matters
referred to therein, fairly present the information called for with respect
to such matters in all material respects.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of the Selling Shareholders, provided that copies
of any such statements or certificates shall be delivered to Underwriters'
Counsel. The opinions of such counsel for the Selling Shareholders shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(d) At the Closing Date and the Additional Closing Date, you shall have
received a certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company, dated the Closing Date, or
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Additional Closing Date, as the case may be, to the effect that the condition
set forth in subsection (a) of this SECTION 6 has been satisfied, that as of the
date hereof and as of the Closing Date, or Additional Closing Date, as the case
may be, the representations and warranties of the Company set forth in SECTION 1
hereof are accurate, and that as of the Closing Date, or the Additional Closing
Date, as the case may be, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed.
(e) At the Closing Date, you shall have received certificates executed by
the respective Selling Shareholders, each dated the Closing Date, to the effect
that the representations and warranties of such Selling Shareholder set forth in
SECTION 1 hereof are accurate, and that as of the Closing Date, the obligations
of such Selling Shareholder to be performed hereunder on or prior thereto have
been duly performed.
(f) At the time this Agreement is executed, and at the Closing Date and the
Additional Closing Date, you shall have received a letter from Coopers & Lybrand
L.L.P., independent public accountants for the Company, dated, respectively, as
of the date of this Agreement and as of the Closing Date, or Additional Closing
Date, as the case may be, addressed to the Underwriters and in form and
substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the applicable published rules and regulations of the Commission
thereunder and stating that the answer to Item 10 of the Registration Statement
is correct insofar as it relates to them; (ii) stating that, in their opinion,
the financial statements and schedules, if any, of the Company included or
incorporated by reference in the Registration Statement and the Prospectus and
covered by their opinion therein comply as to form in all material respects with
the applicable accounting requirements of the Act and the Exchange Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures (but not an examination made in accordance with
generally accepted auditing standards) consisting of a reading of the latest
available interim consolidated financial statements of the Company and its
subsidiaries, a reading of the minutes of meetings and consents of the
shareholders and boards of directors of the Company and its subsidiaries and the
committees of such boards subsequent to the date of the most recent audited
consolidated balance sheet of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement and the Prospectus,
inquiries of officers and other employees of the Company and its subsidiaries
who have responsibility for financial and accounting matters of the Company and
its subsidiaries with respect to transactions and events subsequent to the date
of the most recent audited consolidated balance sheet of the Company and its
subsidiaries included or incorporated by reference in the Registration Statement
and the Prospectus, and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter, nothing has come to their
attention that would cause them to believe that: (A) the unaudited consolidated
financial statements and schedules, if any, of the Company included or
incorporated by reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the applicable published rules
and regulations of the Commission thereunder or that such unaudited consolidated
financial statements are not fairly presented in conformity with generally
accepted accounting principles except to the extent certain footnote disclosures
have been omitted in accordance with applicable rules of the Commission under
the Exchange Act applied on a basis substantially consistent with that of the
audited consolidated financial statements included or incorporated by reference
in the Registration Statement and the Prospectus; (B) with respect to the period
subsequent to the date of the most recent consolidated balance sheet of the
Company and its subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus, there were, as of the date of the
most recent available monthly consolidated financial statements of the Company
and its subsidiaries, if any, and as of a specified date not more than five days
prior to the date of such letter, any changes in the capital stock or long-term
indebtedness of the Company or any decrease in the net current assets or
shareholders' equity of the Company, in each case as compared with the amounts
shown in the most recent balance sheet included or incorporated by reference in
the Registration Statement and the Prospectus, except for changes or decreases
that the Registration Statement and the Prospectus disclose have occurred or may
occur or which are set forth in such letter; or (C) that during the period from
the date following the date of the most recent consolidated balance sheet of the
Company and its subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus to the date of the most recent
available monthly consolidated financial statements of the Company and its
subsidiaries, if any, and to a specified date not more than five days prior to
the date of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or total or
per share net income, except for decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) stating that they have compared specific
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dollar amounts, numbers of shares, percentages of revenues and earnings, and
other financial information pertaining to the Company and its subsidiaries set
forth in the Registration Statement and the Prospectus, which have been
specified by you prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages, and information may be derived from the general
accounting and financial records of the Company and its subsidiaries or from
schedules furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries, and other appropriate procedures specified by
you (which procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in such letter, and found them
to be in agreement.
(g) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to you and to Underwriters' Counsel, and the Underwriters shall
have received from said Underwriters' Counsel a favorable opinion, dated as of
the Closing Date, and the Additional Closing Date, as the case may be, with
respect to the issuance and sale of the Shares, the Registration Statement and
the Prospectus and such other related matters, as you may reasonably require,
and the Company and the Selling Shareholders shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(h) Prior to the Closing Date and the Additional Closing Date the Company
and the Selling Shareholders shall have furnished to you such further
information, certificates and documents as you may reasonably request.
If any of the conditions specified in this SECTION 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this SECTION 6 shall not be in all material respects
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be canceled by you
at, or at any time prior to, the Closing Date, and the obligations of the
Underwriters to purchase the Additional Shares may be canceled by you at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company and the Selling Shareholders in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
its officers, directors, partners, employees, agents and counsel, and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and 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 Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (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 the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, 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; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense 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 you expressly for use therein. This indemnity agreement will be in
addition to any liability that the Company may otherwise have, including under
this Agreement.
(b) Each Selling Shareholder agrees to indemnify and hold harmless each
Underwriter, its officers, directors, partners, employees, agents and counsel,
and each person, if any who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement
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of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (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 the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company or the Underwriters
by or on behalf of the Selling Shareholder expressly for use therein. The
Underwriters acknowledge that the statements set forth under the caption
"Selling Shareholders" with respect to the Trust constitute the only information
furnished in writing by or on behalf of the Trust expressly for use in the
registration statement for the registration of the Shares, as originally filed
or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof. The Underwriters
further acknowledge that the statements set forth under the caption "Selling
Shareholders" with respect to Stewart constitute the only information furnished
in writing by or on behalf of Stewart expressly for use in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof.
(c) Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, the Selling Shareholders, each of the directors of
the Company, each of the officers of the Company who shall have signed the
Registration Statement, its employees, agents and counsel, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to attorneys'
fees and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and 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 Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (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 the registration statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof 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, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense 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 you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. This indemnity will be in addition to any
liability which any Underwriter may otherwise have including under this
Agreement. The Company and the Selling Shareholders acknowledge that the
statements set forth in the last paragraph of the cover page and in the first
five and last two paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information furnished in writing by or on behalf of any
Underwriter expressly for use in the registration statement relating to the
Shares as originally filed, or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be.
(d) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this SECTION 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
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the defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
that are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in SECTION 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company, the Selling Shareholders
and the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provisions as incurred (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company and
the Selling Shareholders any contribution received by the Company or such
Selling Shareholders from persons, other than the Underwriters, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company) to which the Company, the Selling Shareholders and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company, the Selling Shareholders and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in SECTION 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, the
Selling Shareholders and the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Shareholders and the Underwriters
shall be deemed to be in the same proportion as (w) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses (received by the Company and (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by Stewart and (y) the total proceeds from the offering (net of
underwriting discounts and Commissions but before deducting expenses) received
by the Trust and (z) the underwriting discounts and commissions received by the
Underwriters, respectively, in each case as set forth in the table on the cover
page of the Prospectus; provided, however, that the relative benefits received
by the Company shall be deemed to additionally include the total proceeds from
the offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Selling Shareholders to the extent the Selling
Shareholders are not obligated to provide indemnification pursuant to the terms
of SECTION 7(b). The relative fault of the Company, the Selling Shareholders and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Shareholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this SECTION 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this SECTION 8, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
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, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights
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to contribution as the Company, subject in each case to clauses (i) and (ii) of
this SECTION 8. 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, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this SECTION 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
withheld. The Selling Shareholders shall not be obligated to make contributions
with respect to any claim unless the Selling Shareholder would be obligated to
provide indemnification with respect to such claim pursuant to the terms of
SECTION 7(b).
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made by you
pursuant to subsection (b) below) exceed in the aggregate 10% of the number
of shares of Firm Shares or Additional Shares, as the case may be, which
all Underwriters have agreed to purchase hereunder, then such Firm Shares
or Additional Shares to which the default relates shall be purchased by the
nondefaulting Underwriters in proportion to their respective commitments
hereunder.
(b) In the event that such default relates to more than 10% of the Firm
Shares, or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including
any nondefaulting Underwriter or Underwriters who so agree) to purchase
such Firm Shares, or Additional Shares, as the case may be, to which such
default re lates, on the terms contained herein. In the event that within
five calendar days after such a default you do not arrange for the purchase
of the Firm Shares or Additional Shares, as the case may be, to which such
default relates as provided in this SECTION 9, this Agreement or, in the
case of a default with respect to the Additional Shares, the obligations of
the Underwriters to purchase and of the Company to sell the Additional
Shares, shall thereupon terminate, without liability on the part of the
Company or the Selling Shareholders with respect thereto (except in each
case as provided in SECTIONS 5, 7(A) and 8 hereof) or the Underwriters, but
nothing in this Agreement shall relieve a defaulting Underwriter or
Underwriters of its or their liability, if any, to the other several
Underwriters, the Company and the Selling Shareholders for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the nondefaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the
Company shall have the right to postpone the Closing Date, or Additional
Closing Date, as the case may be, for a period, not exceeding five business
days, in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the
opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include
any party substituted under this SECTION 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares
and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Underwriters, the Selling
Shareholders and the Company contained in this Agreement, including the
agreements contained in SECTION 5, the indemnity agreements contained in SECTION
7 and the contribution agreements contained in SECTION 8, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof or by or on behalf
of the Company, any of its officers and directors or the Selling Shareholders or
any controlling person thereof, and shall survive delivery of and payment for
the Shares to and by the several Underwriters. The representations contained in
SECTION 1 and the agreements contained in SECTIONS 5, 7, 8 and 11(D) hereof
shall survive the termination of this Agreement including pursuant to SECTIONS 9
or 11 hereof.
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11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at such time after
notification of the effectiveness of the Registration Statement as you, the
Company and the Selling Shareholders shall agree upon the initial public
offering price and the purchase price per Share. If either the initial public
offering price or the purchase price per Share has not been agreed upon prior to
5:00 p.m., New York time, on the seventh full business day after the
Registration Statement shall have become effective, this Agreement shall
thereupon terminate without liability to the Company, the Selling Shareholders
or the Underwriters, except as herein expressly provided. Until this Agreement
becomes effective as aforesaid, it may be terminated by the Company by notifying
you and the Selling Shareholders, or by action of the Selling Shareholders by
notifying the Company and you or by you by notifying the Company and the Selling
Shareholders. Notwithstanding the foregoing, the provisions of this SECTION 11
and of SECTIONS 1, 5, 7 and 8 hereof shall at all times be in full force and
effect.
(b) You shall have the right to terminate this Agreement at any time prior
to the Closing Date, or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, by giving notice to the Company, if any domestic or international event
or act or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, the securities markets; or if trading on
the New York or American Stock Exchanges or in the over-the-counter market shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges by the New York or American Stock
Exchanges or by order of the Commission or any other governmental authority
having jurisdiction; or if the United States shall have become involved in a war
or major hostilities; or if a banking moratorium has been declared by a state or
federal authority, or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if any new restriction
materially adversely affecting the distribution of the Firm Shares, or the
Additional Shares, as the case may be, shall have become effective; or if the
Company shall have sustained a material or substantial loss, which, whether or
not such loss shall have been insured, in your judgment makes it inadvisable to
proceed with the offering, sale, or delivery of the Firm Shares, or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus; or if there shall have been such change in the market for the
Company's securities or securities in general, or in political, financial or
economic conditions as in your judgment makes it inadvisable to proceed with the
offering, sale or delivery of the Firm Shares, or the Additional Shares, as the
case may be, on the terms contemplated by the Prospectus; or if, (i) either the
Company or any of its subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated by reference in the
Prospectus any 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, otherwise than as set
forth or contemplated in the Prospectus or (ii) since the respective dates as of
which information is given in the Prospectus there shall have been any change in
the capital stock or long-term debt of the Company or any of its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii) above, is in your
reasonable judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Firm Shares,
or the Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this SECTION 11 shall be by
telephone, telex, telegraph, or telecopy, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than pursuant to (i) notification by you as provided in
SECTION 11(A) hereof, or (ii) SECTIONS 9(B) or 11(B) hereof), or if the sale of
the Shares provided for herein is not consummated because any condition to the
obligations of the several Underwriters set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company or the
Selling Shareholders to perform any agreement herein, or comply with any
provision hereof, the Company agrees subject to demand by you, to reimburse the
Underwriters for all out-of-pocket expenses (including the fees and expenses of
their counsel), incurred by the several Underwriters in connection herewith.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and (i) if sent to any
Underwriter, shall be mailed, delivered, telexed, telegraphed, or telecopied,
and
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confirmed in writing, to such Underwriter c/o Bear, Stearns & Co. Inc., 245
Park Avenue, New York, New York 10167, Attention: Corporate Finance and (ii) if
sent to the Company or either of the Selling Shareholders shall be mailed,
delivered, telexed, telegraphed, or telecopied, and confirmed in writing to the
Company, 110 Veterans Memorial Boulevard, Metairie, Louisiana 70005, Attention:
Ronald H. Patron; and, in the case of either of the Selling Shareholders, to
such person in care of the Company at the address set forth above.
13. PARTIES. You represent that you are authorized to act on behalf
of the several Underwriters named in SCHEDULE I hereto, and the Company and the
Selling Shareholders shall be entitled to act and rely on any request, notice,
consent, waiver or agreement purportedly given on behalf of the Underwriters
when the same shall have been given by you on such behalf. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the several
Underwriters, the Selling Shareholders and the Company and the controlling
persons, directors, officers, employees and agents referred to in SECTIONS 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. CONSTRUCTION. This Agreement shall be construed in accordance with
the internal laws of the State of New York, without giving effect to the rules
governing conflicts of laws. Time is of the essence in this agreement.
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<PAGE>
If the foregoing correctly sets forth the understanding among you, the
Company and the Selling Shareholder, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
COMPANY:
STEWART ENTERPRISES, INC.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
---------------------------------
SELLING SHAREHOLDERS:
----------------------------------------
Frank B. Stewart, Jr.
THE FRANK B. STEWART, JR. CHARITABLE
REMAINDER UNITRUST
By:
------------------------------------
John C. McNamara, Trustee
By:
------------------------------------
Edward N. George, Trustee
Accepted as of the date first above written.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO CHICAGO CORPORATION
JOHNSON RICE & COMPANY L.L.C.
By: BEAR, STEARNS & CO. INC.
By:
---------------------------
Print Name:
-------------------
Title:
-----------------------
On behalf of themselves and the other several Underwriters named in SCHEDULE I
hereto.
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<PAGE>
SCHEDULE I
NUMBER OF
UNDERWRITERS FIRM SHARES
- ------------ -----------
Bear, Stearns & Co. Inc. ............................
Goldman, Sachs & Co. ................................
ABN AMRO Chicago Corporation ........................
Johnson Rice & Company L.L.C. .......................
Total ....................................... 4,750,000
=========
21
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SCHEDULE II
Significant Subsidiaries
------------------------
Restland Funeral Home, Inc.
Cemetery Management, Inc.
S. E. Mid-Atlantic, Inc.
S. E. South Central, Inc.
S. E. Australia, Inc.
Woodlawn Park Cemetery Co., Inc.
22
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Amendment No. 2 to the
registration statement of Stewart Enterprises, Inc. on Form S-3 of our reports
dated December 13, 1996 on our audits of the consolidated financial statements
and financial statement schedule of Stewart Enterprises, Inc. and Subsidiaries,
as of October 31, 1996 and 1995 and for each of the three years in the period
ended October 31, 1996. We also consent to the reference to our firm under the
caption "Independent Accountants."
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
June 17, 1997
