1
SOS STAFFING SERVICES, INC.
2,200,000 Shares
Common Stock
($0.01 par value)
UNDERWRITING AGREEMENT
December ___, 1996
UNTERBERG HARRIS
PAINEWEBBER INCORPORATED
XXXXXX X. XXXX & COMPANY
As Representatives of the
several underwriters,
c/o Unterberg Harris
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
SOS Staffing Services, Inc., a Utah corporation (the
"Company"), and the persons named in Schedule II hereto (the "Selling
Shareholders") propose to sell an aggregate of 2,200,000 shares of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), to the
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, of which 2,000,000 shares are
to be issued and sold by the Company, and 200,000 shares are to be sold by the
Selling Shareholders. The 2,000,000 shares of Common Stock to be issued and sold
by the Company are hereinafter called the "Company Shares". The 200,000 shares
of Common Stock to be sold by the Selling Shareholders are hereinafter called
the "Shareholder Shares." The Company Shares and Shareholder Shares are
hereinafter called the "Firm Shares." The Company also proposes to grant to the
Underwriters an option to purchase up to 330,000 additional shares of Common
Stock (the "Option Shares"; the Option Shares, together with the Firm Shares,
being hereinafter called the "Shares").
1. Registration Statement and Prospectus. The Company has
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (Registration No. 333-16187) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), has filed such amendments thereto, if any,
and such amended preliminary prospectuses as may have been required to the date
of this Agreement, and will file such additional amendments thereto and such
amended prospectuses as
2
may hereafter be required. The term "preliminary prospectus" as used herein
means a preliminary prospectus as contemplated by Rule 430 or Rule 430A of the
rules and regulations of the Commission under the Act (the "Rules and
Regulations") included at any time as part of the registration statement. Copies
of such registration statement and amendments and of each related preliminary
prospectus have been delivered to the Representatives. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective will be filed promptly by the Company
with the Commission. If such registration statement has become effective, a
final prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will be filed promptly
by the Company with the Commission in accordance with Rule 424(b) of the Rules
and Regulations. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A. The term "Prospectus" means the prospectus
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
included in the Registration Statement.
2. Agreements to Sell and Purchase. The Company hereby agrees
to issue and sell the Company Shares to the Underwriters, and each Selling
Shareholder, severally and not jointly, hereby agrees to sell to the
Underwriters the number of Shareholder Shares set forth opposite such Selling
Shareholder's name in Schedule II hereto. Each of the Underwriters, upon the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, agrees, severally and not jointly, to
purchase from the Company and such Selling Shareholders at a price per share of
$_____ (the "Purchase Price"), the respective number of Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
that bears the same proportion to the number of Firm Shares to be sold by the
Company or by such Selling Shareholders as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the Underwriters the Option Shares and the Underwriters shall have
the right to purchase, severally and not jointly, up to 330,000 Option Shares
from the Company at the Purchase Price. Option Shares may be purchased solely
for the purpose of covering over-allotments made in connection with the offering
of the Firm Shares. The Underwriters may exercise their right to purchase Option
Shares in whole or in part from time to time by giving written notice thereof to
the Company within 30 days after the date of the Prospectus. The Representatives
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Option Shares to be purchased pursuant to such
exercise and the date for payment and delivery thereof. The date specified in
any such notice shall be a business day (i) no earlier than the Closing Date (as
hereinafter defined), (ii) no later than 10 business days after such notice has
been given and (iii) no earlier than two business days after such notice has
been given. If any Option Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company
2
3
the number of Option Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) which bears the same proportion to
the total number of Option Shares to be purchased from the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
bears to the total number of Firm Shares.
The Company and the Selling Shareholders hereby agree,
severally and not jointly, and the Company shall, prior to or concurrently with
the execution of this Agreement, deliver an agreement executed by each of the
directors, executive officers and shareholders of the Company listed on Annex I
hereto, pursuant to which each such person agrees, not to offer, sell, contract
to sell, grant any option to purchase, or otherwise dispose of any Common Stock
of the Company or any shares convertible into or exercisable or exchangeable for
such Common Stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any such Common Stock,
except (i) to the Underwriters pursuant to this Agreement, (ii) to any member of
such person's immediate family or to a revocable trust for the benefit of such
person or any member of such person's immediate family, provided that any such
transferee shall agree to be bound by such conditions, (iii) the surrender of
any Common Stock or any option exercisable for Common Stock as complete or
partial payment by such person for shares of Common Stock to be acquired upon
exercise of such option granted to such person, or (iv) as otherwise provided in
such agreement, for a period of 180 days following the effective date of the
Registration Statement without the prior written consent of Unterberg Harris.
Notwithstanding the foregoing, during such period the Company may issue and sell
Common Stock pursuant to the Company's existing stock option plan.
3. Terms of Public Offering. The Company and the Selling
Shareholders are advised by you that the Underwriters propose (i) to make a
public offering of their respective portions of the Shares as soon after the
effective date of the Registration Statement as in your judgment is advisable
and (ii) initially to offer the Shares upon the terms set forth in the
Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 a.m., New York City time, on
the third business day, unless otherwise permitted or required by the Commission
pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), following the date of the public offering (the "Closing Date"),
at such place as you shall designate. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you, the Company and the Selling Shareholders.
Delivery to the Underwriters of and payment for any Option
Shares to be purchased by the Underwriters shall be made at such place as the
Representatives shall designate at 10:00 a.m., New York City time, on the date
specified in the applicable exercise notice given by the Representatives
pursuant to Section 2 (the "Option Closing Date"). The Option Closing Date and
the location of delivery of and the form of payment for such Option Shares may
be varied by agreement between the Representatives and the Company.
3
4
Certificates for the Shares shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date or the Option Closing Date, as
the case may be. Such certificates shall be made available to you for inspection
not later than 1:00 p.m., New York City time, on the business day next preceding
the Closing Date or the Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or the Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the respective Selling Shareholders, for the respective
accounts of the several Underwriters, against payment of the Purchase Price
therefor by certified or official bank checks payable in New York Clearing House
next day funds to the order of the Company and the applicable Selling
Shareholders.
5. Agreements of the Company. The Company agrees with you that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the date and time that this
Agreement is executed (the "Execution Time"), and any amendment
thereof, to become effective. Prior to the termination of the offering
of the Shares, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus without the
prior consent of the Representatives. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. The Company will promptly
advise the Representatives (A) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto, shall have
become effective, (B) when the Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (C) when, prior to termination of the offering of the
Shares, any amendment to the Registration Statement shall have been
filed or become effective, (D) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (E) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (F) 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 such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances
4
5
under which they were made not misleading, or if it shall be necessary
to amend the Registration Statement or supplement the Prospectus to
comply with the Act or the rules thereunder, the Company promptly will
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, (A) signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, (B) prior to 10:00 a.m., New York City time, on the
Business Day next succeeding the date of this Agreement and from time
to time so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will furnish or
cause to be furnished to the Representatives copies of all reports on
Form SR required by Rule 463 under the Act. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange for the qualification of the
Shares for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Shares and will
pay the fee of the National Association of Securities Dealers, Inc.
("NASD"), in connection with its review of the offering.
(f) The Company will use the net proceeds
received by it from the sale of the Shares in the manner
specified in the Prospectus under "Use of Proceeds."
(g) For the lesser of five years after the date of this
Agreement and the period during which the Company is required by the
Exchange Act to file reports with the Commission, the Company will (i)
mail as soon as reasonably practicable after the end of each fiscal
year to the record holders of its Common Stock a financial report of
the Company and its subsidiaries on a consolidated basis (and a similar
financial report of all unconsolidated subsidiaries, if any), all such
financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of cash
flows and a consolidated statement of shareholders' equity as of the
end of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by independent
certified public accountants, and (ii) mail and make generally
available as soon as practicable after the end of each quarterly period
(except for the last
5
6
quarterly period of each fiscal year) to such holders a consolidated
balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of
all unconsolidated subsidiaries, if any) as of the end of and for such
period, and for the period from the beginning of such year to the close
of such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(h) During the period referred to in paragraph (g), the
Company will furnish to you upon request a copy of each report or other
publicly available information of the Company mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
(i) The Company will use its best reasonable efforts to
maintain the inclusion of the Common Stock on the Nasdaq National
Market (or on a national securities exchange) for the lesser of five
years after the date of this Agreement and the period ending on the
date on which the Company is no longer required by the Exchange Act to
file reports with the Commission as a result of a merger,
consolidation, sale of assets or other corporate reorganization
consummated in compliance with the Exchange Act.
(j) The Company will use its best reasonable efforts to do and
perform all things required or necessary to be done and performed under
this Agreement by the Company prior to the Closing Date or the Option
Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
6. Representations and Warranties of the
Company. The Company represents and warrants to each Underwriter that:
(a) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any
preliminary prospectus, the Registration Statement or the Prospectus or
any part thereof and no proceedings for a stop order suspending the
effectiveness of the Registration Statement or any of the Company's
shares have been instituted or are pending or, to the Company's
knowledge, threatened. The phrase "to the Company's knowledge" and
similar references to the knowledge of the Company when used herein
shall mean, with respect to the matter covered thereby, the actual
knowledge of the Company and any director or officer of the Company. On
the Effective Date, on the date the Prospectus is first filed with the
Commission pursuant to Rule 424(b) (if required), on the Closing Date
and when any post-effective amendment to the Registration Statement
becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment or supplement thereto),
including the financial statements included or incorporated by
reference in the Prospectus, did or will comply with all applicable
6
7
provisions of the Act and the Rules and Regulations and will contain
all statements required to be stated therein in accordance with the Act
and the Rules and Regulations. On the Effective Date, the Closing Date
and when any post-effective amendment to the Registration Statement
becomes effective, no part of the Registration Statement, the
Prospectus or any such amendment or supplement, and the Preliminary
Prospectus, at the time thereof, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The representations and warranties in this Section 1(a)(ii)
do not apply to any statements or omissions made in reliance on and in
conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives specifically for
inclusion in the Registration Statement or Prospectus or any amendment
or supplement thereto. The Company acknowledges that the statements set
forth under the heading "Underwriting" in the Prospectus constitute the
only information relating to any Underwriter furnished in writing to
the Company by the Representatives specifically for inclusion in the
Registration Statement.
(b) The Company is, and Xxxxx & Associates, Inc., a New Mexico
corporation, and SOS Collection Services, Inc., an Arizona corporation,
comprising all of the Company's subsidiaries (collectively,
"Subsidiaries") are each, and at the Closing Date will be, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. The Company and its Subsidiaries each
has, and at the Closing Date will have, full power and authority to
conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus. The Company and its
Subsidiaries each is, and at the Closing Date will be, duly licensed or
qualified to do business and in good standing in all jurisdictions in
which the nature of the activities conducted by it or the character of
the assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified will
not have a material adverse effect on the Company or the Subsidiary or
the Company's or Subsidiary's business, properties, business prospects,
condition (financial or otherwise) or results of operations. The
Company or its Subsidiaries do not own, and at the Closing Date will
not own, directly or indirectly, any shares of stock or any other
equity or long-term debt shares of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other
entity. Complete and correct copies of the charter and bylaws of the
Company and its Subsidiaries and all amendments thereto, have been
delivered to the Representatives, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date.
(c) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, under "Capitalization"
and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date, based upon the
assumptions set forth therein, and the Company is not a party to or
bound by any instrument, agreement or other arrangement providing for
it to issue any capital stock, rights, warrants, options or other
shares, except for this Agreement and as described in the
7
8
Prospectus. The Shares and all other shares issued or issuable by the
Company conform or, when issued and paid for, will conform, in all
material respects to all statements with respect thereto contained in
the Registration Statement and the Prospectus. All issued and
outstanding shares of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and, the holders thereof
have no rights of rescission with respect thereto, and are not subject
to personal liability by reason of being such holders; and none of such
shares were issued in violation of the preemptive rights of any holders
of any security of the Company or similar contractual rights granted by
the Company. The Shares are not and will not be subject to any
preemptive or other similar rights of any shareholders, have been duly
authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable
and will conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability
solely as such holders; all corporate action required to be taken for
the authorization, issue and sale of the Shares has been duly and
validly taken; and the certificates representing the Shares will be in
due and proper form. Upon the issuance, delivery and payment pursuant
to the terms hereof of the Shares to be sold by the Company hereunder,
each of the Underwriters will acquire good and indefeasible title to
such Shares free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction of any kind
whatsoever. The outstanding shares of Common Stock, including the
Shares to be purchased by the Underwriters from the Selling
Shareholders, have been, and the Shares to be issued and sold by the
Company when issued, delivered and paid for on the Closing Date will
be, duly authorized, validly issued, fully paid and nonassessable and
will not be subject to any preemptive or similar right. Except as
described in the Prospectus, the Company does not have outstanding, and
at the Closing Date will not have outstanding, any options to purchase,
or any rights or warrants to subscribe for, or any shares or
obligations convertible into, or any contracts or commitments to issue
or sell, any shares of Common Stock, or any such rights, warrants,
convertible shares or obligations.
(d) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and
are owned directly by the Company free and clear of any lien, charge,
claim, encumbrance, security interest, defect or other restriction of
any kind whatsoever.
(e) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the
Prospectus present fairly the consolidated financial condition of the
Company and its Subsidiaries as of the dates indicated and the results
of operations and cash flows of the Company and its Subsidiaries for
the periods specified, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
entire period involved, except as otherwise disclosed in the
Prospectus. No other financial statements or schedules of the Company
or its Subsidiaries are required by the Act or the Rules and
Regulations to be included in the
8
9
Registration Statement or the Prospectus. Xxxxxx Xxxxxxxx LLP, who
certified the financial statements and supporting schedules, are
independent public accountants as required by the Act and the Rules and
Regulations.
(f) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as otherwise stated therein, (i) there has not
been and will not have been any change in the capitalization of the
Company or its Subsidiaries, or in the business, properties, business
prospects, condition (financial or otherwise) or results of operations
of the Company or its Subsidiaries, arising for any reason whatsoever,
(ii) the Company and its Subsidiaries each has not incurred and will
not incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) except as contemplated in the Registration
Statement and the Prospectus, the Company has not and will not have
paid or declared any dividends or other distributions of any kind on
any class of its capital stock.
(g) The Company and its Subsidiaries each (i) has paid, when
due, all federal, state, and local taxes for which it is liable,
including, but not limited to, withholding taxes and amounts payable
under Chapter 21 through 24 of the Internal Revenue Code of 1986 (the
"Code"), and has furnished all information returns it is required to
furnish pursuant to the Code, (ii) to the Company's knowledge, has
established adequate reserves for such taxes which are not due and
payable, and (iii) does not have any tax deficiency or claims
outstanding, assessed, to its knowledge, or proposed against it.
(h) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the
issuance by the Company of the Shares, (ii) the purchase by the
Underwriters of the Shares, (iii) the consummation by the Company of
any of its obligations under this Agreement, or (iv) resale of the
Shares in connection with the distribution contemplated hereby.
(i) The Company and its Subsidiaries each maintains insurance
of the types and in the amounts which the Company reasonably believes
are adequate for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including but
not limited to, workers' compensation insurance, insurance covering
real and personal property owned or leased by the Company or the
Subsidiary against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is
in full force and effect.
(j) The Company is not (i) an "investment company" or a
company "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" of a holding company, or an
"affiliate" thereof, within the meaning of the Public Utility
9
10
Holding Company Act of 1935, as amended.
(k) Except as set forth in the Prospectus, there is no action,
suit or proceeding pending or threatened against or affecting the
Company or its Subsidiaries, or any of their respective officers in
their capacities as such, before or by any federal or state court,
commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, which is required to be
disclosed in the Registration Statement or which might materially and
adversely affect the Company or its Subsidiaries, or their respective
business, properties, business prospects, condition (financial or
otherwise) or results of operations.
(l) No consent, approval, authorization or order of, or filing
or declaration with, any court or governmental agency or body is
required for or in connection with the sale of the Shares hereunder
except such as have been obtained prior to the date hereof under the
Act or the Rules and Regulations or as may be required under state
securities or Blue Sky laws, Canadian securities laws or the bylaws and
rules of the NASD in connection with the purchase and distribution by
the Underwriters of the Shares to be sold by the Company.
(m) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company
in accordance with the terms hereof. The performance of this Agreement
and the consummation of the transactions contemplated hereby will not
result in the creation or imposition of any lien, charge or encumbrance
upon any of the assets of the Company or its Subsidiaries pursuant to
the terms or provisions of, or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or give
any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, the charter or
bylaws of the Company or its Subsidiaries (as amended to date) or any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to which
the Company or a Subsidiary is a party or by which the Company or a
Subsidiary or any of their respective properties is bound or affected,
or violate or conflict with any judgment, ruling, decree, franchise,
license or permit of any court or other governmental agency or body or
any order, statute, rule or regulation applicable to the business or
properties of the Company.
(n) The Company and its Subsidiaries each has good and
indefeasible title to all properties and assets described in the
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Prospectus or are not material to the business of the Company or the
Subsidiary. The Company and its Subsidiaries each has valid, subsisting
and enforceable leases for the properties described in the Prospectus
as leased by it, with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such
properties by the Company or
10
11
the Subsidiary.
(o) There is no document or contract required to be described
in the Prospectus or Registration Statement or to be filed as an
exhibit to the Registration Statement which is not so described or
filed. Each such contract to which the Company or one of its
Subsidiaries is a party has been duly and validly authorized, executed
and delivered, is in full force and effect, constitutes a valid and
binding agreement of each of the parties thereto, and is enforceable
against each such party in accordance with its terms. No such contract
has been assigned by the Company or one of its Subsidiaries, and the
Company knows of no present condition or fact which would prevent
compliance by the Company or its Subsidiaries or any other party
thereto with the terms of any such contract in accordance with its
terms. The Company or any of its Subsidiaries does not have any present
intention to exercise any right that it may have to cancel any such
contract or otherwise to terminate its rights and obligations
thereunder, and does not have any knowledge that any other party
thereto has any intention not to render full performance as
contemplated by the terms thereof.
(p) The Company and its Subsidiaries each has generally
enjoyed a satisfactory employer-employee relationship with its
employees and is in compliance in all material respects with all
applicable federal, state, local laws and regulations respecting
employment and employment practices, terms and conditions of employment
and wages and hours. There are no pending investigations of which the
Company is aware involving the Company or any of its Subsidiaries, by
the U.S. Department of Labor, or any other governmental agency
responsible for the enforcement of such federal, state or local laws
and regulations. There is no significant unfair labor practice charge
or complaint against the Company or any of its Subsidiaries pending
before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or, to the Company's
knowledge, threatened against or involving the Company or any of its
Subsidiaries, or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company
or any of its Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or
any of its Subsidiaries. No labor dispute with the employees of the
Company or any of its Subsidiaries exists, or, to the Company's
knowledge, is imminent.
(q) The Company and its Subsidiaries each owns or possesses
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names presently employed by them in
connection with the business now operated by them, and no proceeding
involving any claim of infringement of or conflict with asserted rights
of others with respect to any of the foregoing has been instituted or
is threatened, pending or contemplated which, if the subject of an
unfavorable ruling, decision or finding, might materially and adversely
affect the Company or the Subsidiary or their respective business,
properties, business prospects, condition (financial
11
12
or otherwise) or results of operation taken as a whole.
(r) The Company and its Subsidiaries each possesses such
licenses, permits, consents, orders, approvals, certificates or
authorizations issued by the appropriate Federal, state or local
regulatory agencies or bodies necessary to conduct the business now
operated by each of them, and no proceeding relating to the revocation
or modification of any such licenses, permits, consents, orders,
certificates or authorizations has been instituted or is threatened,
pending or contemplated which, if the subject of an unfavorable ruling,
decision or finding, might materially and adversely affect the Company
or the Subsidiary or their respective business, properties, business
prospects, condition (financial or otherwise) or results of operation
taken as a whole.
(s) Neither the Company nor any of its Subsidiaries is in
violation of its charter or bylaws or in default (nor has an event
occurred which with notice or lapse of time or both would constitute a
default or acceleration) in the performance of any obligation,
agreement or condition contained in any contract, indenture, mortgage,
note, lease, or other agreement or instrument to which the Company or
the Subsidiary is a party or by which it or its properties is bound or
affected, and neither the Company nor any of its Subsidiaries is in
violation of any judgment, ruling, decree, order, franchise, license or
permit of any court or other governmental agency or body or any
statute, rule or regulation applicable to the business or properties of
the Company or the Subsidiary, where such violation or default might
materially and adversely affect the Company or the Subsidiary or their
respective business, properties, business prospects, condition
(financial or otherwise) or results of operations taken as a whole.
(t) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Representatives was
or will be, when made, inaccurate, untrue or incorrect in any material
respect.
(u) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result,
under the Act or otherwise, in, or which has constituted, stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(v) Except as set forth herein or in the Master Agreement
among Underwriters dated the date hereof, there are no claims,
payments, issuances, arrangements or understandings, whether oral or
written, for services in the nature of a finder's or origination fee
with respect to the sale of the Shares hereunder or any other
arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors,
shareholders, partners, employees or affiliates that may affect the
Underwriters' compensation, as determined by the NASD.
12
13
(w) The Company and its Subsidiaries each has not since its
inception (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(x) There are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between the Company, and any officer,
director, shareholder of the Company, or any affiliate or associate of
any of the foregoing persons or entities required to be disclosed by
Item 404 of Regulation S-K of the Rules and Regulations other than
those which are described in the Prospectus.
(y) There are no persons with registration or other similar
rights to have any shares registered pursuant to the Registration
Statement or otherwise registered by the Company pursuant to the Act
which are required to be disclosed in the Registration Statement, other
than as disclosed therein.
(z) The Company has made available to each Representative a
true and complete copy of each report, schedule, registration statement
and definitive proxy statement filed by the Company with the Commission
since July 3, 1995 (the "Company Filings"), which are all the documents
(other than preliminary material) that the Company was required to file
with the Commission since such date. As of their respective dates, the
Company Filings complied in all material respects with the requirements
of the Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Company
Filings, and none of the Company Filings contained any 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.
(aa) The Company's Common Stock is listed for trading on the
Nasdaq National Market under the symbol "XXXX", and the Company is not
aware of any threatened or pending proceedings or action by the NASD to
revoke or suspend such listing.
(bb) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
7. Representations and Warranties of the
Selling Shareholders. Each Selling Shareholder, severally and not
jointly, represents and warrants to each Underwriter that:
(a) Such Selling Shareholder has and will have on the Closing
Date and the
13
14
Option Closing Date, as the case may be, good and valid title to the
Shares to be sold by such Selling Shareholder hereunder, free and clear
of any liens, encumbrances, equities and claims whatsoever. Such
Selling Shareholder has full power, right and authority to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder,
and upon sale and delivery of, and payment for, such Shares, as
provided herein, such Selling Shareholder will convey good and
indefeasible title to such Shares, free and clear of any liens,
encumbrances, equities and claims whatsoever.
(b) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted or which might reasonably be expected to, cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares and has not effected any sales of shares of Common
Stock which, if effected by the issuer, would be required to be
disclosed in response to Item 701 of Regulation S-K.
(c) The Corporation of the President of the Church of Xxxxx
Xxxxxx of Latter-day Saints (the "CLDS") has executed a Letter of
Transmittal and Escrow Agreement (the "Escrow Agreement") with First
Security Bank of Utah, N.A. as Escrow Agent (the "Escrow Agent") with
respect to the Shares. The Escrow Agent is authorized to execute and
deliver this Agreement on behalf of the CLDS, to determine the purchase
price to be paid by the Underwriters to the CLDS, as provided in
Section 2 hereof, to authorize the delivery of the Shares to be sold by
the CLDS hereunder, to accept payment therefor, and otherwise to act on
behalf of the CLDS in connection with this Agreement.
(d) Such Selling Stockholder (other than the CLDS) has, and on
the Closing Date and the Option Closing Date, as the case may be, will
have, full legal right, power and authority to enter into this
Agreement and the Custody Agreement with First Security Bank of Utah,
N.A., as Custodian (the "Custody Agreement"), and to sell, assign,
transfer and deliver such Shares in the manner provided herein and
therein, and this Agreement and the Custody Agreement have been duly
authorized, executed and delivered by such Selling Stockholder and each
of this Agreement and the Custody Agreement is a valid and binding
agreement of such Selling Stockholder enforceable in accordance with
its terms, except as rights to indemnity and contribution hereunder may
be limited by applicable law other than those imposed by the Act or the
Blue Sky Laws.
(e) The power of attorney signed by such Selling Stockholder
(other than the CLDS) appointing Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxx,
or either one of them, as his, her or its attorney-in-fact to the
extent set forth therein with regard to the transactions contemplated
hereby and by the Registration Statement and the Custody Agreement has
been duly authorized, executed and delivered by or on behalf of such
Selling Stockholder and is a valid and binding instrument of such
Selling Stockholder enforceable in accordance with its terms, and,
pursuant to such power of attorney, such Selling Stockholder has
authorized Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxx, or either one of
them, to execute and
14
15
deliver on his, her or its behalf this Agreement and any other document
necessary or desirable in connection with transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Stockholder
pursuant to this Agreement.
(f) Certificates in negotiable form for the Shares have been
placed in escrow or custody, for delivery pursuant to the terms of this
Agreement; the Shares represented by the certificates so held in escrow
or custody are subject to the interests hereunder of the Underwriters
and the Company; the arrangements for such escrow or custody and
delivery of such certificates are to that extent irrevocable, and that
the obligations of such Selling Shareholder hereunder are not subject
to termination by any acts of the Selling Shareholder, or by operation
of law, or the occurrence of any other event; and if any event shall
occur before the delivery of such Shares hereunder, certificates for
the Shares will be delivered by the Escrow Agent or the Custodian, as
the case may be, in accordance with the terms and conditions of this
Agreement as if such event had not occurred, regardless of whether or
not the Escrow Agent or the Custodian, as the case may be, shall have
received notice of such event.
(g) Except as otherwise set forth in the Prospectus, the
execution, delivery and performance of this Agreement by such Selling
Stockholder, compliance by such Selling Stockholder with all the
provisions hereof and the consummation of the transactions contemplated
hereby will not require any consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the Act or Blue
Sky Laws) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, organizational
documents of such Selling Stockholder, if not an individual, or any
agreement, indenture or other instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder or property
of such Selling Stockholder is bound, or violate or conflict with any
laws, administrative regulation or ruling or court decree applicable to
such Selling Stockholder or property of such Selling Stockholder.
(h) Such Selling Shareholder (other than the CLDS) has
reviewed and is familiar with the Registration Statement, and the
preliminary prospectus contained therein, insofar as it relates to such
Selling Shareholder, and to the knowledge of such Selling Shareholder
without independent investigation, the preliminary prospectus contained
therein does not, and will not on the Closing Date or the Option
Closing Date, as the case may be, include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares and the Option
Shares, as the case may be, under this Agreement are subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Shareholders contained herein as of the date of this Agreement, the
15
16
Closing Date and the Option Closing Date, to the accuracy of the statements of
the Company and the Selling Shareholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Shareholders of their respective obligations hereunder and to the satisfaction
of each of the following conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m. (and in the case of a registration statement, if
any, filed under Rule 462(b) of the Act, not later than 10:00 p.m.) New
York City time on the date of this Agreement; if filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule
424(b), the Prospectus, and any such supplement, will be filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representatives shall have received an opinion dated
the Closing Date, and with respect to any Option Shares the Option
Closing Date, satisfactory in form and substance to the
Representatives, from Xxxxxxx, Parr, Waddoups, Xxxxx & Xxx, counsel for
the Company and the Selling Shareholders, to the effect set forth in
Exhibit A.
(c) The Representatives shall have received an opinion dated
the Closing Date, and with respect to any Option Shares the Option
Closing Date, from Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel
for the Underwriters, with respect to the Registration Statement, the
Prospectus (together with any supplement thereto) and this Agreement,
which opinion shall be satisfactory in all respects to the
Representatives, and the Company and each Selling Shareholder shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
16
17
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(e) The Representatives shall have received a certificate from
each of the Selling Shareholders, dated as of the Closing Date, to the
effect that (i) the representations and warranties of such Selling
Shareholder contained in this Agreement are true and correct with the
same force and effect as though expressly made at and as of the Closing
Date, (ii) such Selling Shareholder has reviewed the Prospectus, and
the information contained therein relating to such Selling Shareholder
and the Selling Shareholder's Shares and it does not contain any untrue
statement or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which
they were made, not misleading and (iii) such Selling Shareholder has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date.
(f) At the Execution Time and at the Closing Date, Xxxxxx
Xxxxxxxx LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, with respect to the financial statements and certain
financial information contained in the Registration Statement and
Prospectus in form and substance satisfactory to the Representatives.
(g) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change in
the capital stock (other than pursuant to the exercise of stock options
outstanding as of the respective dates of the Registration Statement
and Prospectus) or any material change in the indebtedness of the
Company or (ii) any change, or any development involving a prospective
change, in or affecting the business or properties of the Company the
effect of which, in any case referred to in clause (i) or (ii) above,
is, in the judgment of the Representatives, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the Shares as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto).
(h) On or prior to the Execution Time, the Nasdaq National
Market System shall have approved the Underwriters' participation in
the distribution of the Shares to be sold by the Selling Shareholders.
(i) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit B
hereto from each officer and
17
18
director of the Company and major shareholder, addressed to the
Representatives, in which each such person agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce an offering of, any shares of Common Stock beneficially owned
by such person or any shares convertible into, or exchangeable for,
shares of Common Stock for a period of 180 days following the effective
date of the Prospectus without the prior written consent of the
Representatives, other than shares of Common Stock disposed of as bona
fide gifts.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 8 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company and
each Selling Shareholder in writing or by telephone or telegraph confirmed in
writing.
9. Reimbursement of Underwriters' Expenses. If the sale of the
Shares provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 8 is not satisfied, because
of any termination pursuant to Section 12 or because of any refusal, inability
or failure on the part of the Company or any Selling Shareholder to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Shares. If the Company is
required to make any payments to the Underwriters under this Section 9 because
of any Selling Shareholder's refusal, inability or failure to satisfy any
condition to the obligations of the Underwriters set forth in Section 8, the
Selling Shareholders pro rata in proportion to the percentage of Shares to be
sold by each shall reimburse the Company on demand for all amounts so paid;
provided, however, the CLDS shall only be required to reimburse the Company in
any such case to the extent such payments are made because of the CLDS's
refusal, inability or failure to satisfy such condition.
18
19
10. Indemnification and Contribution.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each
person who controls any Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement for the registration of the Shares as originally filed or in
any amendment thereof, or in any 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, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company and the Selling Shareholders
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion therein, (ii)
the Selling Shareholders will only be liable in any such case to the
extent that such loss, claim, damage or liability arises out of or is
based on written information provided by the Selling Shareholders for
inclusion therein and (iii) such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any director, officer, employee or agent of such
Underwriter or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage or liability purchased
the Shares that are the subject thereof if such person did not receive
a copy of the Prospectus (or the Prospectus as supplemented) excluding
documents incorporated therein by reference at or prior to the
confirmation of the sale of such Shares to such person in any case
where such delivery is required by the Act and such untrue statement or
omission of a material fact contained in any Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus (as supplemented);
provided, further, that notwithstanding the foregoing, the liability of
the Selling Shareholders under this paragraph 10(a) shall be limited,
with respect to each of them, to the proceeds received by each of them
hereunder. This indemnity agreement will be in addition to any
liability which the Company or the Selling Shareholders may otherwise
have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each Selling Shareholder, each of the Company's
directors, and each of the Company's officers who signs the
Registration Statement, and each person who controls the
19
20
Company or the Selling Shareholders within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity
to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf
of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company and each Selling
Shareholder acknowledge that the statements set forth under the heading
"Underwriting" in any Preliminary Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of
the several Underwriters for inclusion in any Preliminary Prospectus or
the Prospectus, and you, as the Representatives, confirm that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained
by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not
20
21
the indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 10 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the
Selling Shareholders, jointly and severally, and the Underwriters agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which
the Company, one or more of the Selling Shareholders and one or more of
the Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and by the Underwriters on the other from
the offering of the Shares; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Shares) be responsible for
any amount in excess of the underwriting discount or commission
applicable to the Shares purchased by such Underwriter hereunder. If
the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Selling Shareholders,
jointly and severally, and the Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders
on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such Losses as well as
any other relevant equitable considerations. Benefits received by the
Company and the Selling Shareholders shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses), and
benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company, the Selling
Shareholders or the Underwriters. The Company, the Selling Shareholders
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method
of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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 10, each person who
controls an Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the
meaning of either the Act or 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 to contribution as
the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
21
22
11. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Shares agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Shares set forth
opposite their names in Schedule I hereto bears to the aggregate amount of
Shares set forth opposite the names of all the remaining Underwriters) the
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Shares set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Shares, and
if such nondefaulting Underwriters do not purchase all the Shares, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Shareholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 11, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Shareholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
12. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Shares, if prior to such
time (a) trading in the Company's Common Stock shall have been suspended by the
Commission or the National Association of Securities Dealers Automated Quotation
National Market System or trading in securities generally on the New York Stock
Exchange or the National Association of Securities Dealers Automated Quotation
National Market System shall have been suspended or limited or minimum prices
shall have been established on such Exchange or Market System, (b) a banking
moratorium shall have been declared either by Federal or New York State
authorities; or (c) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the Shares as contemplated by the
Prospectus (exclusive of any supplement thereto).
13. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Shareholder or the Company or any of the officers, directors or
controlling persons referred to in Section 10 hereof, and will survive delivery
of and payment for the Shares. The provisions of Sections 9 and 10 hereof shall
survive the termination or cancellation of this Agreement.
22
23
14. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, care of Unterberg
Harris, 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent
to the Company, will be mailed, delivered or telegraphed and confirmed to it at
SOS Staffing Services, Inc., 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000;
or if sent to the Selling Shareholders, will be mailed, delivered or telegraphed
and confirmed to them at the addresses set forth in Schedule II and Schedule III
hereto.
15. Successors. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and controlling
persons referred to in Section 10 hereof, and no other person will have
any right or obligation hereunder.
16. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the State of
New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
23
24
Please confirm that the foregoing correctly sets forth the
agreement between the Company, the Selling Shareholders and the several
Underwriters.
Very truly yours,
SOS STAFFING SERVICES, INC.
By:_______________________
Name:_____________________
Title:____________________
THE SELLING SHAREHOLDERS
By:_______________________
Attorney-in-fact
CORPORATION OF THE PRESIDENT OF THE
CHURCH OF LATTER-DAY SAINTS
By:_______________________
Name:_____________________
Title:____________________
UNTERBERG HARRIS
PAINEWEBBER INCORPORATED
XXXXXX X. XXXX & COMPANY
Acting severally on behalf of themselves
and the several Underwriters
named in Schedule I hereto
By: UNTERBERG HARRIS
By:_______________________
Name:_____________________
Title:____________________
S-1
25
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
Unterberg Harris...........................
PaineWebber Incorporated...................
Xxxxxx X. Xxxx & Company ..................
Total 2,200,000
---------
26
SCHEDULE II
Firm Selling Shareholders
Number of Firm Shares
to be Purchased
Name and Address by the Underwriters
---------------- ---------------------
The Corporation of the President of the Church
of Xxxxx Xxxxxx of Latter-day Saints ................ 110,000
00 Xxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
The Xxxxxxx X. and Xxxxxx X. Xxxxxxxx
Charitable Foundation ............................... 90,000
c/o SOS Staffing Services, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Total 200,000
27
ANNEX I
Required Lock-ups
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
The Xxxxxxx X. and Xxxxxx X. Xxxxxxxx Charitable Foundation
Xxxxxxxx Limited
Xxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxx
X. X. Xxxxxxxx
Xxxx X. Xxxxxxxx
Xxxxxxx X. xxXxxx
XxXxx X. Xxxxxx
R. Xxxxxx Xxxxxx
Xxxxxxxx X. Xxxx
