EXHIBIT 1
SIMON TRANSPORTATION SERVICES INC.
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2,000,000 SHARES
CLASS A COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
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________________, 1997
Xxxxxx Xxxxxx & Company, Inc.
X.X. Xxxxxxx & Sons, Inc.
Xxxxxx X. Xxxx & Company
As Representative of the Underwriters
Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
Simon Transportation Services Inc., a Nevada corporation (the "Company")
and Xxxxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx Revocable Trust UTAD
2/12/93, Xxxxx X. Xxxxx, Xxx Xxxxx, Xxxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxx
Xxxxxxx and Xxxxx Xxxx (the "Selling Shareholders"), propose to sell to the
several underwriters named in Schedule I (collectively, the "Underwriters") an
aggregate of 2,000,000 shares of the Company's Class A common stock, $.01 par
value per share (the "Common Stock"), as set forth in Schedule I hereto (such
2,000,000 shares are herein referred to as the "Firm Shares"). The Firm Shares
are to be sold to each Underwriter, acting severally and not jointly, in such
amounts as are set forth in Schedule I opposite the name of such Underwriter.
Solely for the purpose of covering overallotments in the sale of the Firm
Shares, the Company and Xxxxxxx X. Xxxxx further propose to grant pro rata the
right to said Underwriters to purchase up to an additional 100,000 and 200,000,
respectively, Shares (the "Option Shares") identical to the Firm Shares. The
Firm Shares and Option Shares are herein sometimes referred to as the "Shares."
The Company was incorporated in Nevada in August 1995. Pursuant to the
Exchange Agreement dated April 19, 1995, the stockholders of Xxxx Xxxxx
Trucking, Inc., a Utah corporation, and Freight Sales, Inc., a Utah corporation,
and Xxxxxxx X. Xxxxx, as the sole proprietor of X. X. Xxxxx Trucking, entered
into a reorganization intended to qualify as a tax-free transfer to a controlled
corporation under Section 351 of the Internal Revenue Code of 1986, as amended.
In this reorganization, the present stockholders of Xxxx Xxxxx Trucking, Inc.
contributed certain assets in exchange for stock, and subsequent to such stock
issuances, the stockholders entered into a Formation Agreement dated May 31,
1995, whereby they agreed to contribute all of the issued and outstanding stock
of Xxxx Xxxxx Trucking, Inc. to the Company effective immediately prior to the
effectiveness of this offering. As a result of this reorganization, Xxxx Xxxxx
Trucking, Inc. will become a wholly owned subsidiary of the Company (the
"Subsidiary"). The "Company" refers to Simon Transportation Services Inc. and
the Subsidiary, unless the context clearly indicates otherwise.
Of the several underwriters named in Schedule I for whom you are acting as
representatives (the "Representatives"), you have advised the Company and the
Selling Shareholders that you are authorized to enter into this Agreement on
behalf of the several Underwriters and that Xxxxxx Xxxxxx & Company, Inc. has
authority to execute this Agreement, bind the Underwriters and Representatives
and take all actions on behalf of the Representatives referenced in this
Agreement.
Section 1. Representations and Warranties of the Company and the
Subsidiary. The Company and the Subsidiary represent and warrant to and agree
with each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-________) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and the applicable rules and
regulations (the "1933 Act Regulations") of the Securities and Exchange
Commission (the "Commission") and has been filed with the Commission; and such
amendments to such registration statement as may have been required, if any,
prior to the date hereof have been filed with the Commission, and such
amendments have been similarly prepared. Copies of such registration statement
and amendment or amendments and of each related preliminary prospectus, and the
exhibits, financial statements, and schedules, as finally amended and revised,
have been delivered to you. The Company has prepared in the same manner, and
proposes so to file with the Commission, one of the following: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including the form of final prospectus, or (ii) a final prospectus in accordance
with Rules 430A and 424(b) of the 1933 Act Regulations. As filed, such
amendment and form of final prospectus, or such final prospectus, shall include
all Rule 430A Information (as defined below) and, except to the extent that you
shall agree in writing to a modification, shall be in all respects in the form
furnished to you prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed at such date
and time, shall contain only such specific additional information and other
changes (beyond that contained in the latest preliminary prospectus) as the
Company shall have previously advised you in writing would be included or made
therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the Closing Time (as hereinafter defined), shall also mean such registration
statement as so amended; provided, however, that such term shall also include
all Rule 430A Information deemed to be included in such registration statement
at the time such registration statement becomes effective as provided by Rule
430A of the 1933 Act Regulations. The term "Preliminary Prospectus" shall mean
any preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Shares in the
form in which it is first filed with the Commission pursuant to Rule 424(b) of
the 1933 Act Regulations or, if no filing pursuant to Rule 424(b) of the 1933
Act Regulations is required, shall mean the form of final prospectus included in
the Registration Statement at the time such Registration Statement becomes
effective. The term "Rule 430A Information" means information with respect to
the Shares and the offering thereof permitted pursuant to Rule 430A of the 1933
Act Regulations to be omitted from the Registration Statement when it becomes
effective.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or threatened by the Commission or the state securities
authority of any jurisdiction, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
1933 Act and the 1933 Act Regulations and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to untrue statements or
omissions of material facts to the extent they are corrected in the Prospectus
first filed pursuant to Rule 424(b) under the 1933 Act Regulations, or to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter expressly for use in the
Registration Statement.
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(c) When the Registration Statement shall become effective, when the
Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
when any amendment to the Registration Statement becomes effective, and when any
supplement to the Prospectus is filed with the Commission, and at each Date of
Delivery (as defined in Section 3), (i) the Registration Statement, the
Prospectus, and any amendments thereof and supplements thereto will conform in
all material respects with the applicable requirements of the 1933 Act and the
1933 Act Regulations, and (ii) neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto, will contain any 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 not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter expressly
for use in the Registration Statement.
(d) The Company and the Subsidiary have been duly incorporated and each is
validly existing as a corporation in good standing under the laws of its
respective state of incorporation with all requisite corporate power and
authority to own, lease, and license its properties and to conduct its business
as now conducted and as described in the Registration Statement and the
Prospectus, and each has been duly qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its business
requires such qualification, and where the failure to do so would have a
material adverse effect on the Company and the Subsidiary taken as a whole. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity, and upon effectiveness of the offering contemplated
hereby will acquire all of the capital stock of the Subsidiary.
(e) The Company has full legal right, power, and authority to enter into
this Agreement, to issue, sell, and deliver the Shares as provided herein, and
to consummate the transactions contemplated herein. This Agreement has been
duly authorized, executed, and delivered by the Company and constitutes the
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that the indemnification
provisions set forth in Section 9 of this Agreement may be limited by applicable
law or equitable principles, and except as enforceability may be limited by
bankruptcy, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally and rules of law governing
specific performance, injunctive relief, and other equitable remedies. Each
consent, approval, authorization, order, designation, or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale, and delivery of the Shares, the execution, delivery, and performance of
this Agreement by the Company, and the consummation by the Company and the
Subsidiary of the transactions contemplated hereby, has been made or obtained
and is in full force and effect, except such as may be necessary to make the
Registration Statement effective (and maintain it as effective) under the 1933
Act and to qualify the Shares for public offering by you under state securities
or "blue sky" laws or by the National Association of Securities Dealers, Inc.
("NASD") in connection with the purchase and distribution of the Shares by the
Underwriters. Neither the issuance, sale, and delivery of the Shares nor the
execution, delivery, and performance of this Agreement by the Company nor the
consummation by the Company or the Subsidiary of the transactions contemplated
hereby will result in a breach or violation of any of the terms and provisions
of, or constitute a default by the Company or the Subsidiary under the Articles
of Incorporation or Bylaws of the Company or Subsidiary, or will result in a
breach or violation (that has not been waived) of any of the terms or provisions
of, or constitute default by the Company or the Subsidiary under, any indenture,
mortgage, deed of trust, loan agreement, note, lease, or other agreement or
instrument to which the Company or the Subsidiary is a party or to which it or
its properties is subject, or of any statute, judgment, decree, order, rule, or
regulation of any court or governmental agency or body applicable to the Company
or the Subsidiary or any of their respective properties.
(f) The Company has Class A common stock and Class B common stock issued
and outstanding as set forth in the Registration Statement. The Company has no
other issued and outstanding capital stock. The Company has an authorized,
issued, and outstanding capitalization as set forth in the Prospectus under the
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caption "Capitalization" as of the date therein; all the issued and outstanding
shares of capital stock of the Company, including the Shares to be sold by the
Selling Shareholders, have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description of the Common Stock
contained in the Prospectus and the rights set forth in the instruments defining
the same; the Shares to be sold by the Company and the Selling Shareholders when
issued and delivered by the Company and the Selling Shareholders, and paid for
pursuant to this Agreement, will be validly issued, fully paid, and
nonassessable and will conform in all material respects to the description
thereof contained in the Prospectus. No preemptive rights of stockholders exist
with respect to the Shares. No person or entity holds a right to require or
participate in the registration under the 1933 Act of the Shares and no person
holds a right to require registration under the 1933 Act of any shares of Common
Stock of the Company at any other time. No person or entity has a right of
participation or first refusal with respect to the sale of the Shares by the
Company. None of the issued shares of capital stock of the Company has been
issued in violation of any preemptive or similar rights; all shares of Common
Stock of the Company subject to outstanding options or warrants have been duly
authorized and reserved for issuance, and, when issued in accordance with the
terms of the applicable option or warrant, will be validly issued, fully paid,
and nonassessable and will not be issued in violation of any preemptive rights
(contractual or other); there is no outstanding option, warrant, or other right
calling for the issuance of and no commitment, plan, or arrangement to issue,
any share of capital stock of the Company, or any security convertible into or
exchangeable for capital stock of the Company, except as is disclosed in the
Registration Statement and the Prospectus
(g) The financial statements of the Company (including the related notes
and schedules) included in the Registration Statement and the Prospectus present
fairly, in all material respects, the financial position of the Company as of
the dates indicated and the results of its operations and its cash flows for the
periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
amounts in the Prospectus under the captions "Prospectus Summary -- Summary
Consolidated Financial and Operating Data" and "Selected Consolidated Financial
and Operating Data" are accurately computed, fairly present the information
shown therein and, to the extent derived therefrom, have been determined on a
basis consistent with the financial statements included in the Registration
Statement and the Prospectus. No other financial statements or schedules are
required by Form S-1 or otherwise to be included in the Registration Statement,
the Prospectus, or any Preliminary Prospectus.
(h) Xxxxxx Xxxxxxxx LLP, which has examined and is reporting upon the
audited financial statements and schedules included in the Registration
Statement certifying that they are, and were during the periods covered by their
reports included in the Registration Statement and Prospectus, independent
public accountants with respect to the Company and the Subsidiary within the
meaning of the 1933 Act and the 1933 Act Regulations.
(i) Neither the Company nor the Subsidiary has sustained, since September
30, 1996, any material loss or interference with its business from fire,
explosion, flood, hurricane, accident, or other calamity, whether or not covered
by insurance, or from any labor dispute or arbitrators' or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as otherwise stated in
the Registration Statement and Prospectus, there has not been (i) any material
change in the capital stock, long-term debt, obligations under capital leases,
or short-term borrowings of the Company or the Subsidiary, other than from
equipment obligations incurred in the ordinary course of business and draws upon
the Subsidiary's line of credit; (ii) any material adverse change, or any
development which could reasonably be seen as involving a prospective material
adverse change, in or affecting the business, prospects, properties, assets,
results of operations, or condition (financial or other) of the Company or the
Subsidiary; (iii) any liability or obligation, direct or contingent, incurred,
or undertaken by the Company or the Subsidiary which is material to the business
or condition (financial or other) of the Company or the Subsidiary, except for
liabilities or
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obligations incurred in the ordinary course of business; (iv) any declaration or
payment of any dividend or distribution of any kind on or with respect to its
capital stock; or (v) any transaction that is material to the Company or the
Subsidiary, except transactions in the ordinary course of business.
(j) Neither the Company nor the Subsidiary is in violation of its Articles
of Incorporation or Bylaws; and, as of the date hereof, no material default
exists, and no event has occurred, nor state of facts exists, which, with notice
or after the lapse of time to cure or both, would constitute a material default
in the due performance and observance of any obligation, agreement, covenant,
consideration, or condition contained in any indenture, mortgage, deed of trust,
loan agreement, note, lease, or other agreement or instrument to which the
Company or the Subsidiary is a party or by which they or any of their properties
is subject, except as may be occasioned by the transactions contemplated and
described in the Registration Statement and Prospectus, and for which waivers or
consents may be obtained, and no violation exists of any law, order, rule,
regulation, writ, injunction, or decree of any government, governmental
instrumentality, or court, domestic, or foreign, in any such case where the
consequences of such violation or default is likely to materially adversely
affect the assets, properties, results of operation, financial condition, or
business prospects of the Company or the Subsidiary.
(k) To the Company's actual knowledge, the Company and the Subsidiary are
in material compliance with all federal, state, and local laws, ordinances,
rules, regulations, and other governmental requirements relating to pollution,
control of chemicals, management of waste, discharges of materials into the
environment, health, safety, natural resources, and the environment
(collectively, "Environmental Laws"), and the Company and the Subsidiary have,
and are in compliance with, all licenses, permits, registrations, and government
authorizations necessary to operate under all applicable Environmental Laws.
Except as otherwise disclosed in the Prospectus, neither the Company nor the
Subsidiary has received any written or oral notice from any governmental entity
or any other person and there is no pending or threatened claim, litigation, or
any administrative agency proceeding that: alleges a violation of any
Environmental Laws by the Company or the Subsidiary; alleges the Company or the
Subsidiary is a liable party or a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S) 9601, et seq., or any state superfund law; has resulted in or could result
in the attachment of an environmental lien on any real property owned, leased,
or controlled by the Company or the Subsidiary; or alleges the occurrence of
contamination of any of such real property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the real property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
(l) The Company and the Subsidiary have good and marketable title to all
real property owned by them, free and clear of all liens and encumbrances, which
are material in amount, and represent amounts due and payable, except such as
are reflected in the Registration Statement. Each parcel of real property
owned, leased, or controlled by the Company and the Subsidiary and each
improvement thereon complies with all applicable codes, laws, and regulations
(including, without limitation, building and zoning codes, laws and regulations,
and laws relating to access to facilities located on such real property) except
if and to the extent disclosed in the Prospectus and except for such failures to
comply that would not have a material adverse impact on the Company or the
Subsidiary. Neither the Company nor the Subsidiary has knowledge of any pending
or threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on, or access to such real property and improvements, except such
proceedings or actions that would not have a material adverse effect on the
assets, properties, results of operation, financial condition, or business
prospects of the Company or the Subsidiary.
(m) Any real property and buildings held under lease by the Company or the
Subsidiary are held by it under valid, subsisting, and enforceable leases with
such exceptions as are not material and do not interfere in any material respect
with the use made and proposed to be made of such property and buildings by the
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Company or the Subsidiary; such leases conform in material respect to the
description thereof, if any, set forth in the Registration Statement; and no
notice has been given or material claim asserted by anyone adverse to the rights
of the Company or the Subsidiary under any of the leases or affecting the rights
of the Company or the Subsidiary to the continued possession of the leased
property.
(n) Except as described in the Prospectus, there is not pending or, to the
Company's and the Subsidiary's actual knowledge, threatened, any action, suit,
proceeding, inquiry, or investigation, against the Company, the Subsidiary, or
any of their respective officers, directors, or significant stockholders or to
which the properties, assets or rights of the Company or Subsidiary are subject,
before or brought by any court or governmental agency or body or board of
arbitrators, which could result in any material adverse change in the Company
and the Subsidiary, or which could materially adversely affect the consummation
of the transactions contemplated by this Agreement.
(o) There are no contracts or other documents required by the 1933 Act or
the 1933 Act Regulations to be described in or incorporated by reference into
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which have not been accurately described in all material
respects or incorporated or filed as required. The agreements to which the
Company and the Subsidiary are parties described in the Registration Statement
and the Prospectus are valid and enforceable in all material respects by the
Company or the Subsidiary, and, to the Company's and Subsidiary's actual
knowledge, the other contracting party or parties thereto are not in material
breach or default under any of such agreements.
(p) The Company and the Subsidiary own, possess, or have obtained all
material permits, licenses, franchises, certificates, consents, orders,
approvals, and other authorizations of governmental or regulatory authorities as
are necessary to own or lease, as the case may be, and to operate its properties
and to carry on their business as presently conducted. Neither the Company nor
the Subsidiary has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents, orders,
approvals, or authorizations which revocation or modification could materially
and adversely affect the assets, properties, results of operation, financial
condition, or business prospects of the Company or the Subsidiary.
(q) The Company and the Subsidiary own or possess appropriate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights, software, and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and the Subsidiary to conduct
their business now, and as proposed to be conducted or operated as described in
the Prospectus, and neither the Company nor the Subsidiary has received any
notice of infringement of or conflict with (and knows of no such infringement of
or conflict with) asserted rights of others with respect to any Intangibles
which could materially and adversely affect the assets, properties, results of
operation, financial condition, or business prospects of the Company or the
Subsidiary.
(r) The systems of internal accounting controls utilized by the Company
and the Subsidiary are sufficient to meet the objectives of internal accounting
control insofar as those objectives pertain to the prevention or detection of
errors or irregularities in amounts that would be material in relation to the
Company's financial statements; and, neither the Company, the Subsidiary nor any
employee or agent of the Company or Subsidiary has made any payment of funds of
the Company or Subsidiary or received or retained any funds and no funds of the
Company or the Subsidiary have been set aside to be used for any payment in
violation of any law, rule, or regulation.
(s) The Company and the Subsidiary have filed on a timely basis all
federal, state, local, and foreign income and franchise tax returns required to
be filed through the date hereof and has paid all taxes shown as due thereon;
and no tax deficiency, has been asserted against the Company or the Subsidiary,
nor does the Company or the Subsidiary know of any tax deficiency which is
likely to be asserted against the Company or the Subsidiary which if determined
adversely to the Company or Subsidiary could materially adversely affect
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the assets, properties, results of operation, financial condition, or business
prospects of the Company or the Subsidiary. All tax liabilities are adequately
provided for on the books of the Company and the Subsidiary.
(t) The Company and the Subsidiary maintain insurance of the types and in
the amounts that have been disclosed to you, such amounts are deemed by the
Company, the Subsidiary and the Selling Shareholders, appropriate for their
businesses, are in excess of all statutory requirements, and all policies are in
full force and effect.
(u) No labor problem exists with Company's or Subsidiary's employees or,
to the Company's and Subsidiary's actual knowledge, is threatened or imminent
that could materially adversely affect the Company or the Subsidiary, and
neither the Company nor the Subsidiary is aware of any existing, threatened, or
imminent labor disturbance by the employees of any of its principal suppliers,
contractors, or customers that could be expected to materially adversely affect
the business, prospects, properties, assets, results of operation, or condition
(financial or other) of the Company or Subsidiary.
(v) The Company has obtained the agreement of each of the Selling
Stockholders that, for a period of 180 days from the date on which the
Registration Statement becomes effective such persons will not, without your
prior written consent, directly, or indirectly sell, offer to sell, grant any
option for the sale of, or otherwise dispose of any shares of the Company's
Common Stock (including, without limitation, shares of Common Stock which may be
deemed to be beneficially owned by such person in accordance with the Securities
Exchange Act of 1934 Regulations); provided that during such period such persons
may make gifts of shares of Common Stock upon the condition that the donees
agree to be bound by the foregoing restriction in the same manner as it applies
to such persons.
(w) Neither the Company nor its officers, directors, stockholders, or
affiliates have taken and will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in or
constitute, the stabilization or manipulation of the price of the Shares to
facilitate the sale or resale of the Shares.
(x) The Shares have been approved for listing on The Nasdaq Stock Market
(National Market) (the "NSM"), subject to official notice of issuance.
(y) The Company and the Subsidiary have participated in the preparation of
the Registration Statement and Prospectus and no facts have come to the
attention of the Company or the Subsidiary which leads it to believe that the
Registration Statement or the Prospectus, or any amendment thereto, as of their
respective effective or filing dates, 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 not misleading.
(z) Neither the Company nor the Subsidiary has incurred any liability for
a fee, commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement other than as contemplated hereby.
Any certificate signed by any duly authorized officer of the Company and
the Selling Shareholders, and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company and
the Subsidiary, respectively, to each Underwriter as to the matters covered
thereby.
Section 2. Representations and Warranties of the Selling Shareholders.
The Selling Shareholders represent and warrant to each Underwriter and agree
that:
(a) The Selling Shareholders have all right, power and authority necessary
to execute and deliver this Agreement, to sell and deliver the Shares to be sold
by them hereunder and to perform all other obligations
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under this Agreement; the execution, delivery and performance of this Agreement
by the Selling Shareholders will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the Shares to be sold
by the Selling Shareholders pursuant to the terms of, or constitute a default
under, any agreement or other instrument, or any order, rule or regulation of
any court or governmental agency having jurisdiction over the Selling
Shareholders or the Selling Shareholders' properties; and except as required by
the 1933 Act and applicable state securities laws, no consent, authorization or
order of, or filing or registration with, any court or governmental agency is
required (or, if required, has been obtained) for the execution, delivery and
performance of this Agreement by the Selling Shareholders.
(b) At the Closing Time, the Selling Shareholders will have good title to
the Shares being sold by them hereunder; such Shares are, and at the Closing
Time will be, validly authorized, issued and outstanding, fully paid and
nonassessable Common Stock of the Company with no personal liability attaching
to the ownership thereof; and, assuming that the Underwriters are bona fide
purchasers under Section 8-203 of the Uniform Commercial Code, upon the delivery
of and payment for such Shares as contemplated herein, such Underwriters will
receive good title to the Shares purchased by them, respectively, from such
Selling Shareholders, free and clear of any and all liens, encumbrances,
security interests and adverse claims.
(c) Without the prior written consent of the Underwriters, the Selling
Shareholders and any affiliate controlled by them (other than the Company) will
not sell or offer or contract to sell, except to the Underwriters pursuant to
this Agreement, any securities of the Company which they beneficially own within
180 days after the effective date of the Registration Statement; the Selling
Shareholders have not taken, and agree that they will not take, directly or
indirectly, any action which might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock of the Company.
(d) Except as set forth in the Prospectus, the Selling Shareholders are
disposing of their Shares hereunder for their own account and are not selling
such Shares, directly or indirectly, for the benefit of the Company or the
Underwriters.
(e) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by the Selling Shareholders
expressly for use therein, such Preliminary Prospectus, did, and the
Registration Statement and the Prospectus and any amendment or supplement
thereto will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
1933 Act and the 1933 Act Regulations and not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) The sale of the Shares by the Selling Shareholders pursuant to this
Agreement is not prompted by any material information concerning the Company
which is not set forth in the Prospectus.
Section 3. Sale and Delivery of Shares to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Company and the
Selling Shareholders agree to sell an aggregate of 2,000,000 firm shares to the
Underwriters named in Schedule I hereto, and each such Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Shareholders, at a purchase price of $_____ per share, the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto.
(b) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Company and
Xxxxxxx X. Xxxxx hereby grants pro rata an option to the Underwriters, severally
and not jointly, to purchase up to an additional 100,000 and 200,000 Option
Shares
8
respectively on the same terms and conditions as the Firm Shares. The option
hereby granted will expire if not exercised within the 30 day period after the
first date on which the Firm Shares are released by you for sale to the public,
by giving written notice to the Company. The option granted hereby may be
exercised, in whole or in part (but not more than once), only for the purpose of
covering the over-allotments that may be made in connection with the offering
and distribution of the Firm Shares. The right to purchase may be exercised by
your giving 48 hours prior written or telephonic notice (subsequently confirmed
in writing) to the Company and Xxxxxxx X. Xxxxx. This notice of exercise shall
set forth the number of Option Shares as to which the several Underwriters are
exercising the option, and the time and date of payment and delivery thereof.
Such time and date of delivery (the "Date of Delivery") shall be determined by
you but shall not be earlier than the second business day after the date on
which the notice of the exercise of the option shall have been given nor later
than seven full business days after the exercise of such option, nor in any
event prior to the Closing Time. If the option is exercised as to all or any
portion of the Option Shares, the Option Shares as to which the option is
exercised shall be purchased by the Underwriters, severally and not jointly, in
their respective underwriting obligation proportions.
(c) Payment of the purchase price for and delivery of the Firm Shares
shall be made at the offices of Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000 or at such other place as shall be agreed upon by the
Company and you, at 10:00 A.M., either (i) on the fourth full business day after
the effective date of the Registration Statement, or (ii) at such other time not
more than ten full business days thereafter as you and the Company shall
determine (unless, in either case, postponed pursuant to Section 12) (such date
and time of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and delivery of the Option
Shares shall be made at the offices of Xxxxxx Xxxxxx & Company, Inc. in the
manner set forth above, or at such other place as the Company and you shall
determine, on the Date of Delivery as specified in the notice from you to the
Company. Payment for the Firm Shares and the Option Shares shall be made to the
Company and Xxxxxxx X. Xxxxx by certified or official bank check or checks in
New York Clearing House next day funds payable to the order of the Company or
Xxxxxxx X. Xxxxx against delivery to you for the respective accounts of the
Underwriters of the Shares to be purchased by them.
(d) The Shares to be purchased by the Underwriters shall be in such
denominations and registered in such names as you may request in writing at
least three full business days before the Closing Time or the Date of Delivery,
as the case may be. The Shares will be made available at the offices of Xxxxxx
Xxxxxx & Company, Inc. or at such other place as Xxxxxx Xxxxxx & Company, Inc.
may designate for examination and packaging not later than 10:00 A.M. at least
two full business days prior to the Closing Time or the Date of Delivery, as the
case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after the
secondary public offering of such Shares, you may from time to time increase or
decrease the public offering price, in your sole discretion, by reason of
changes in general market condition or otherwise.
Section 4. Certain Covenants of the Company. The Company covenants and
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). If the Company
elects to rely upon Rule 430A of the 1933 Act Regulations or the filing of the
Prospectus is otherwise required under Rule 424(b) of the 1933 Act Regulations,
and subject to the provisions of Section 3(b) of this Agreement, the Company
will comply with the requirements of Rule 430A and will file the Prospectus,
properly completed, pursuant to the applicable provisions of Rule 424(b) within
the time period prescribed, and will notify you immediately, and confirm the
notice in writing, (i) when the Registration
9
statement, or any post-effective amendment to the Registration Statement, shall
have become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission to amend the Registration
Statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes. The
Company will use every reasonable effort to prevent the issuance of any such
stop order or of any order preventing or suspending such use and, if any such
order is issued, to obtain the withdrawal thereof at the earliest possible
moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or any amendment or supplement to the Prospectus (i) if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule 430A, to either the prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus
filed in accordance with Rule 424(b), in either case if you shall not have
previously been advised and furnished a copy thereof a reasonable time prior to
the proposed filing, or if you or counsel for the Underwriters shall object to
such amendment or supplement.
(c) The Company has furnished or will furnish to you, at its expense, as
soon as available, as many signed copies of the Registration Statement as
originally filed and of all amendments thereto, whether filed before or after
the Registration Statement becomes effective, copies of all exhibits and
documents filed therewith and signed copies of all consents and certificates of
experts, as you may reasonably request, and has furnished or will furnish to
each Underwriter, one conformed copy of the Registration Statement as originally
filed and of each amendment thereto (but without exhibits).
(d) The Company will deliver to each Underwriter, at its expense, from
time to time, as many copies of each Preliminary Prospectus as such Underwriter
may reasonably request, and the Company hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Company will deliver to each
Underwriter, at its expense, as soon as the Registration Statement shall have
become effective, and thereafter from time to time as requested during the
period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as supplemented or amended) as each
Underwriter may reasonably request. In case you are required to deliver a
prospectus within the nine-month period referred to in Section 10(a)(3) of the
1933 Act in connection with the sale of the Shares, the Company will prepare
promptly upon request, but at the expense of the Underwriters, such amendment or
amendments to the Registration Statement and such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the 1933 Act.
(e) The Company will comply to the best of its ability with the 1933 Act
and the 1933 Act Regulations so as to permit the completion of the distribution
of the Shares as contemplated in this Agreement and in the Prospectus. If, at
any time when a Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Shares, any event shall occur or condition exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or counsel for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of either such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to the
provisions of Section 4(b), such amendment or supplement as may be necessary to
correct such
10
untrue statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements.
(f) The Company will use its best efforts, in cooperation with you, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise so subject.
The Company will file such statements and reports as may be required by the laws
of each jurisdiction in which the Shares have been qualified as above provided.
(g) The Company will use the net proceeds received by it from the sale of
the Shares in the manner specified in the Prospectus under the caption "Use of
Proceeds."
(h) During a period of five years from the date hereof, the Company will
furnish to its stockholders, as soon as practicable after the end of each
respective period, annual reports (including financial statements audited by
independent public accountants), and unaudited quarterly reports of operations
for each of the first three quarters of the fiscal year, and will furnish to
you: (i) concurrently with furnishing such reports to its stockholders,
statements of operations of the Company for each of the first three quarters in
the form furnished to the Company's stockholders; (ii) concurrently with
furnishing to its stockholders, a balance sheet of the Company as of the end of
such fiscal year, together with statements of operations, of cash flows and of
stockholders' equity of the Company for such fiscal year, accompanied by a copy
of the certificate or report thereon of independent public accountants; (iii) as
soon as they are available, copies of all reports (financial or otherwise)
mailed to stockholders; (iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission, any
securities exchange or the NASD; (v) concurrently with its release, every
material press release in respect of the Company or its affairs which is
released or prepared by the Company; and (vi) any additional information of a
public nature concerning the Company or its business that you may reasonably
request. During such five-year period, the foregoing financial statements shall
be on a consolidated basis to the extent that the accounts of the Company are
consolidated with any subsidiaries, and shall be accompanied by similar
financial statements for any significant subsidiary that is not so consolidated.
(i) Except with respect to grants under the Company's Incentive Stock Plan
and Outside Director Plan, for a period of 180 days from the date hereof, the
Company will not, without your prior written consent, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise dispose of,
any Common Stock or securities convertible into Common Stock, other than to the
Underwriters pursuant to this Agreement and other than pursuant to employee
benefit plans in existence on the date of this Agreement.
(j) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for its Common Stock.
(k) The Company will use it best efforts to maintain the listing of its
shares of Common Stock on NSM.
(l) The Company is familiar with the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, and has in the past conducted
its affairs, and will in the future conduct its affairs, in such a manner so as
to ensure that the Company was not and will not be an "investment company"
within the meaning of the Investment Company Act of 1940 and the rules and
regulations thereunder.
11
(m) The Company will supply the Underwriters with copies of all
correspondence to and from and all documents issued to and by the Commission or
the Commission staff in connection with the registration of the Shares under the
1933 Act.
Section 5. Covenants of the Selling Shareholders. The Selling
Shareholders covenant:
(a) To pay all taxes, if any, on the transfer and sale of the Shares to be
sold by them hereunder;
(b) To use reasonable efforts to cause the Registration Statement to
become effective, to do and perform all things to be done and performed by the
Selling Shareholders hereunder prior to the Closing Time and to satisfy all
conditions precedent to the delivery of the Shares to be sold by the Selling
Shareholders; and
(c) Not to sell or offer or contract to sell or cause or permit their
affiliates to sell or offer or contract to sell, except to the Underwriters
pursuant to this Agreement, any Common Stock of the Company within 180 days
after the effective date of the Registration Statement without the prior written
consent of the Underwriters.
Section 6. Payment of Expenses.
(a) The Company will pay and bear all costs, fees, and expenses incident
to the performance of its obligations under this Agreement, including (i) the
fees, disbursements, and expenses of counsel and accountants in the preparation,
printing, and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, the Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters; (ii) the preparation,
printing, and distribution of this Agreement, the Agreement Among Underwriters,
the Selected Dealer Agreement, Blue Sky Memoranda, and any instruments relating
to any of the foregoing (other than the fees and expenses of counsel for the
Underwriters relating thereto); (iii) the issuance and delivery of the Shares to
the Underwriters, including any transfer taxes payable upon the sale of the
Shares to the Underwriters (other than transfer taxes on resales by the
Underwriters); (iv) the fees and disbursements of the Company's counsel and
accountants; (v) the qualification of the Shares under the applicable securities
laws in accordance with Section 4(f) hereof and any filing for review of the
offering with the NASD, including filing fees and fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
Blue Sky Memoranda up to a maximum of $10,000; (vi) the transfer agent's and
registrar's fees and all miscellaneous expenses referred to in Item 14 of the
Registration Statement; (vii) costs related to travel and lodging incurred by
the Company and its representatives relating to meetings with and presentations
to prospective purchasers of the Shares reasonably determined by the
Underwriters to be necessary or desirable to effect the sale of the Shares to
the public; (viii) all other costs and expenses incident to the performance of
the Company's obligations hereunder (including costs incurred in closing the
purchase of the Option Shares, if any) that are not otherwise specifically
provided for in this section. The Company, upon your request, will provide
funds in advance for filing fees in connection with "blue sky" qualifications
and the NASD. It is understood, however, that the Underwriters will pay all
their own costs and expenses, including the fees of their counsel, stock
transfer, taxes on resale of any of the securities by them, and any advertising
expenses connected with any offers that they make.
(b) The Selling Shareholders shall pay their proportionate share of all
underwriters' commissions relating to shares of the Company sold by such Selling
Shareholders.
(c) If the sale of Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to Section 11
hereof 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 other than by
12
reason of a default by any of the Underwriters, the Company and the Selling
Shareholders will reimburse the Underwriters severally on demand for all
reasonable out-of-pocket expenses, including fees and disbursements of
Underwriters' counsel, reasonably incurred by the Underwriters in reviewing the
Registration Statement and the Prospectus, and in investigating and making
preparations for the marketing of the Shares. In no event, however, shall the
liability of any Selling Shareholder for any expenses under this Section 6(c)
exceed the lesser of (i) that proportion of the total of such expenses equal to
the proportion of the total shares sold hereunder which is being sold by such
Selling Shareholder, or (ii) the proceeds that should have been received by such
Selling Shareholder from the Underwriters in the Offering based upon the price
of the Company's stock on the date of termination of this Agreement pursuant to
Section 11.
Section 7. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Shares that they have severally
agreed to purchase pursuant to this Agreement (including any Option Shares as to
which the option granted in Section 3 has been exercised and the Date of
Delivery determined by you is the same as the Closing Time) are subject to the
accuracy of the representations and warranties of the Company contained herein
or in certificates of any officer of the Company delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., eastern time, on the date of this Agreement or, with your consent, at
a later time and date not later, however, than 5:30 P.M., eastern time, on the
first business day following the date hereof, or at such later time or on such
later date as you may agree to in writing; and at the Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to your knowledge or the knowledge of the
Company shall be contemplated by the Commission, and any request on the part of
the Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriters. If the Company has elected to
rely upon Rule 430A, a prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time you shall have received the opinion of Xxxxxxx Law
Firm, P.C., counsel for the Company and the Selling Shareholders, together with
signed or reproduced copies of such opinion for each of the other Underwriters,
in form and substance satisfactory to Baker, Donelson, Bearman & Xxxxxxxx,
counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nevada and
has the requisite corporate power and authority to conduct its business as
described in the Registration Statement and the Prospectus. The Company is
duly qualified and in good standing as a foreign corporation in each other
jurisdiction in which the ownership or leasing of its properties or the
nature or conduct of its business makes such qualification necessary, and
where the failure to be so qualified or in good standing would have a
material adverse effect on the Company.
(ii) The Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Utah and has the requisite corporate power and authority to conduct its
business as described in the Registration Statement and the Prospectus. The
Subsidiary is duly qualified and in good standing as a foreign corporation
in each other jurisdiction in which the ownership or leasing of its
properties or the nature or conduct of its business makes such
qualification necessary, and where the failure to be so qualified or in
good standing would have a material adverse effect on the Subsidiary.
13
(iii) The authorized capital stock of the Company is as set forth in
the Registration Statement and the Prospectus under the caption
"Description of Capital Stock," and the issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable.
(iv) The Shares sold by the Company have been duly authorized and,
when issued and delivered to the Underwriters pursuant to the Underwriting
Agreement against payment of the consideration therefor as provided
therein, will be validly issued, fully paid and nonassessable.
(v) The issuance of the Shares in the manner contemplated by this
Agreement is not subject to any preemptive rights arising under the
Articles of Incorporation or Bylaws of the Company, or under any statute or
by operation of law, or to our actual knowledge, under any contract or
other instrument known to us to which the Company is subject or by which it
or its assets are bound.
(vi) No authorization, approval, or consent of any court or
governmental authority or agency is required to be obtained by the Company
in connection with the offering, issuance, or sale of the Shares by the
Company, except such as may be required under the 1933 Act or the 1933 Act
Regulations, state securities laws or by the NASD.
(vii) Except as described in the Prospectus, such counsel does not
actually know of any past, pending, or threatened action, suit, proceeding,
inquiry, or investigation before any court or before or by any public,
regulatory or governmental body or board against or involving the
properties or business of the Company of a character required to be
disclosed in the Prospectus or, as to threatened litigation, of a character
which would be required to be disclosed if filed, or in either case which,
if successful, would have a material adverse effect on the Company.
(viii) Neither the issuance, sale, and delivery by the Company and
the Selling Shareholders of the Shares, nor the execution, delivery, and
performance of this Agreement, nor the consummation by the Company of any
of the other transactions contemplated hereby will conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, encumbrance, claim or security interest upon any
property or assets of the Company pursuant to any contract, indenture,
mortgage, loan agreement, note, lease, or material agreement or other
instrument actually known to such counsel to which the Company or the
Selling Shareholders is a party or by which it is bound or to which any of
the property of the Company or the Selling Shareholders is subject (unless
such breach, default, or violation has been waived) nor will such action
violate the provisions of the Articles of Incorporation or Bylaws of the
Company, or, so far as is actually known to such counsel, any law,
administrative rule, or regulation or arbitrators' or administrative or
court decree, judgment, or order or material franchise or permit known to
such counsel. To such counsel's actual knowledge, the Company is
conducting its business so as to comply in all material respects with all
applicable statutes and regulations, where the failure to so comply would
have a material adverse effect upon the Company.
(ix) The Registration Statement has become effective under the 1933
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or is pending or contemplated by the Commission. Such counsel
has participated in the preparation of the Registration Statement and
Prospectus. From time to time such counsel has had discussions with
officers, directors, and employees of the Company, accountants and
auditors, the independent accountants who examined certain of the financial
statements of the Company included in the Registration Statement and
Prospectus, and your representatives concerning the information contained
in the Registration Statement and Prospectus and the proposed responses to
various Items in Form S-1. Based thereon, such counsel is of the opinion
that the Registration
14
Statement and the Prospectus and any further amendments and supplements
thereto made by the Company prior to the date hereof (except for the
operating statistics, financial statements, financial schedules, and other
financial data included therein, as to which such counsel expresses no
opinion) comply as to form in all material respects with the requirements
of the 1933 Act and the rules and regulations thereunder.
(x) The descriptions in the Registration Statement and the Prospectus
of the contracts, leases, and other legal documents therein described
present fairly the information required to be shown and there are no
contracts, leases, or other documents known to such counsel of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement which are not
described or filed as required. There are no statutes or regulations
applicable to the Company or certificates, permits, or other authorizations
from governmental regulatory officials or bodies required to be obtained or
maintained by the Company of a character required to be disclosed in the
Registration Statement or the Prospectus which have not been so disclosed
and described therein.
(xi) The Company and the Selling Shareholders have all requisite
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, including the issuance,
sale, and delivery by it of the Shares hereunder. The opinions called for
by this clause (xi) may exclude from their scope any authorization,
approval, order, license, certificate, or permit as may be required under
the "blue sky" laws of any jurisdiction in connection with the distribution
of the Shares contemplated by the Registration Statement.
(xii) This Agreement has been duly authorized, executed, and
delivered by the Company, and, assuming the due authorization, execution,
and delivery by the Underwriters, will be valid and binding obligations of
the Company and the Selling Shareholders enforceable in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, or other laws of general applicability relating
to or affecting creditor's rights, to general equity principles, and except
to the extent that the indemnification provisions in Section 9 of the
Agreement may be limited by federal or state securities laws or the public
policy underlying such laws.
(xiii) Neither the Company nor the Subsidiary is presently in breach
of or default under its Articles of Incorporation or Bylaws, and to our
actual knowledge no material default exists and no event has occurred which
with notice or after the lapse of time to cure or both, would constitute a
material default, in the due performance and observance of any term,
covenant, or condition of any indenture, mortgage, deed of trust, loan
agreement, note, lease, or other agreement or instrument actually known to
such counsel to which the Company, the Subsidiary or the Selling
Shareholders are a party or to which any of its or their properties is
subject, in any such case where the default has not been waived and the
consequences of such violation or default is likely to materially adversely
affect the business, prospects, properties, assets, results of operation,
or condition (financial or otherwise) of the Company or the Subsidiary.
(xiv) Except as set forth in the Registration Statement and
Prospectus, no holders of shares of Common Stock or other securities of the
Company have registration rights with respect to securities of the Company
and, except as set forth in the Registration Statement and Prospectus, all
holders of securities of the Company having registration rights with
respect to shares of Common Stock or other securities of the Company have,
with respect to the offering contemplated hereby, waived such rights in
writing or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement.
15
(xv) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(xvi) Such counsel has participated in the preparation of the
Registration Statement and Prospectus and no facts have come to the
attention of such counsel which leads them to believe that the Registration
Statement (including the Rule 430A Information, if applicable) or the
Prospectus, or any amendment thereto (except for the financial statements
and schedules and other financial or operating data included therein and
written information provided by the Underwriters for use in the section
entitled "Underwriting," as to which such counsel need express no opinion),
as of their respective effective, or filing dates, 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 not
misleading.
In rendering the foregoing opinion, such counsel may rely on the
following:
(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 deem proper and to the extent
specified in such opinion, upon an opinion or opinions (in form and
substance reasonably satisfactory to Underwriters' counsel) of other
counsel familiar with applicable laws; and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and the Selling
Shareholders and certificates or other written statements of officers
or departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and
certificates of the Company's transfer agent, provided that copies of
all such opinions, statements, or certificates shall be delivered to
Underwriters' counsel, and, if written confirmation of the Commission
is not available at the time such opinion is rendered, upon the
current oral representations of members of the Commission's staff with
respect to the Registration Statement or any amendment or supplement
thereto having become effective and the lack of issuance of a stop
order or institution of proceedings for that purpose. The opinion of
counsel for the Company shall state that the opinion of any other
counsel, or certificate or written statement, on which such counsel is
relying is in form reasonably satisfactory to such counsel and that
you and they are justified in relying thereon.
(c) At the Closing Time, you shall have received a favorable opinion from
Baker, Donelson, Bearman & Xxxxxxxx, counsel for the Underwriters, dated as of
the Closing Time, with respect to the Registration Statement, the Prospectus,
and other related matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(d) At the Closing Time, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the 1933 Act and the
1933 Act Regulations and in all material respects shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations, the Company shall
have complied in all material respects with Rule 430A (if it shall have elected
to rely thereon) and neither the Registration Statement nor the Prospectus, as
they may then be amended or supplemented, shall contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the business prospects,
properties, assets, results of operation, or condition (financial or otherwise)
of the Company, whether or not arising in the ordinary course of business;
16
(iii) no action, suit, or proceeding at law or in equity shall be pending or, to
the best of the Company's knowledge, threatened against the Company that would
be required to be set forth in the Prospectus other than as set forth therein
and no proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company before or by any federal, state, or other
commission, board or administrative agency wherein an unfavorable decision,
ruling, or finding could materially adversely affect the business, prospects,
properties, assets, results of operations, or condition (financial or otherwise)
of the Company, other than as set forth in the Prospectus; (iv) the Company and
the Selling Shareholders shall have complied with all agreements and satisfied
all conditions on their respective parts to be performed or satisfied at or
prior to the Closing Time; and (v) the representations and warranties of the
Company set forth in Section 1 and the representations and warranties of the
Selling Shareholders made in Section 2 shall be accurate as though expressly
made at and as of the Closing Time. At the Closing Time, you shall have
received certificates executed by the Selling Shareholders the President and the
Chief Financial Officer of the Company, dated as of the Closing Time, to such
effect and with respect to the following additional matters: (i) the
Registration Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of the Prospectus has been issued, and no proceedings for
that purpose have been instituted or are pending or, to the best of their
knowledge, threatened under the 1933 Act; (ii) they have carefully reviewed the
Registration Statement and the Prospectus and when the Registration Statement
became effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included therein or necessary to make the statements therein not misleading and
neither the Registration Statement nor Prospectus and any amendment or
supplement thereto included any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, and, since the effective date of
the Registration Statement, there has occurred no event required to be set forth
in an amended or supplemented Prospectus that has not been so set forth; and
(iii) all representations, warranties, covenants, and statements made herein by
the Company and the Selling Shareholders, respectively, are true and correct at
such Closing Time, with the same effect as if made on and as of such Closing
Time, and all agreements herein to be performed by the Company and the Selling
Shareholders, on or prior to such Closing Time have been duly performed.
(e) On the business day immediately preceding the date of this Agreement
and at the Closing Time you shall have received from Xxxxxx Xxxxxxxx LLP, a
letter or letters, dated the date hereof and as of the Closing Time in form and
substance satisfactory to you, together with signed or reproduced copies of such
letter for each of the other Underwriters, confirming that they are independent
public accountants with respect to the Company within the meaning of the 1933
Act and 1933 Act Regulations, stating in effect that:
(i) in their opinion, the consolidated financial statements included
in the Registration Statement and covered by their report therein comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of limited procedures (set forth in detail in such
letter and made in accordance with such procedures as may be reasonably
specified by you) not constituting an audit in accordance with generally
accepted auditing standards, consisting of (but not limited to) a reading
of the latest available internal unaudited consolidated financial
statements of the Company, a reading of minute books of the Company,
inquiries of officials of the Company responsible for financial and
accounting matters, and such other inquiries and procedures, as may be
specified in such letter, nothing has come to their attention which caused
them to believe that:
(A) the unaudited financial statements and other unaudited
financial data of the Company included in the Registration Statement
do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act or the 1933 Regulations
17
or are not presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration
Statement;
(B) the amounts of revenue, income before income taxes, net
income and net income per share for the five fiscal years ended
September 30, 1996, included in the Prospectus under the caption
"Prospectus Summary -- Summary Consolidated Financial and Operating
Data" do not agree with the corresponding amounts in the audited
statements of income;
(C) at a specified date not more than five business days prior
to the date of delivery of such letter, there was any change in the
capital stock or long-term debt or obligations under capital leases of
the Company other than scheduled repayments or any decreases in total
assets, stockholders' equity, or other items specified by the
Underwriters from that set forth in the consolidated balance sheet at
September 30, 1996, included in the Prospectus, except as described in
the Prospectus or such letter;
(D) for the period from September 30, 1996, to a specified date
not more than five days prior to the date of delivery of such letter,
there were any decreases in revenue, gross profit, or the total or per
share amounts of income before extraordinary items or net income, of
the Company, in each case as compared with the corresponding period of
the preceding year, except in each case for decreases or increases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iii) in addition to the procedures referred to in clause (ii) above
and the audit referred to in their report included in the Registration
Statement, they have carried out certain specific procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages, and financial
information specified by you which are derived from the general accounting
records of the Company, which appear in the Registration Statement or the
exhibits or schedules thereto and are specified by you, and have compared
such amounts, percentages, and financial information with the accounting
records of the Company and with material derived from such records and have
found them to be in agreement.
(f) At the Closing Time, you shall have received from Xxxxxx Xxxxxxxx LLP
a letter, in form and substance satisfactory to you and dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) above, except that the specified date
referred to shall be a date not more than five business days prior to the
Closing Time.
(g) In the event that either of the letters to be delivered pursuant to
subsections (e) and (f) above sets forth any such changes, decreases, or
increases, it shall be a further condition to your obligations that you shall
have determined, after discussions with officers of the Company responsible for
financial and accounting matters and with Xxxxxx Xxxxxxxx LLP, that such
changes, decreases, or increases as are set forth in such letters do not reflect
a material adverse change in the capital stock, long-term debt, obligations
under capital leases, total assets, or stockholders' equity of the Company as
compared with the amounts shown in the latest condensed consolidated balance
sheet of the Company, or a material adverse change in revenues or the total or
per share amounts of income before extraordinary items or net income, of the
Company, in each case as compared with the corresponding period of the prior
year.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates, and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale of
the Shares as contemplated in this Agreement and the matters referred to in
Section 7(d) and in order to evidence the accuracy and completeness of any of
the representations and warranties or
18
statements of the Company, the performance of any of the covenants of the
Company, or the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company at or prior to the Closing Time in connection
with the authorization, issuance, and sale of the Shares as contemplated in this
Agreement shall be satisfactory in form and substance to you and to counsel for
the Underwriters. The Company will furnish you with such number of conformed
copies of such opinion, certificates, letters, and documents as you shall
request.
(i) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(j) The Firm Shares and the Option Shares, if any, shall have been
approved for listing on NSM upon official notice of the issuance, sale, and
evidence of satisfactory distribution thereof pursuant to this underwritten
public offering.
(k) Each stockholder of the Company specified in Section 1(v) hereof shall
have agreed in writing as to the matters set forth in such section.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company and the Selling Shareholders
at any time at or prior to the Closing Time, and such termination shall be
without liability of any party to any other party. Notwithstanding any such
termination, the provisions of Section 9 shall remain in effect.
Section 8. Conditions to Purchase of Option Shares. In the event that the
Underwriters exercise the option granted in Section 3 hereof to purchase all or
any part of the Option Shares and the Date of Delivery determined by you
pursuant to Section 3 hereof is later than the Closing Time, the obligations of
the several Underwriters to purchase and pay for the Option Shares that they
shall have severally agreed to purchase pursuant to this Agreement are subject
to the accuracy of the representations and warranties of the Company and the
Selling Shareholders herein contained, to the performance by the Company and the
Selling Shareholders of their obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall remain effective at the Date of
Delivery, and, at the Date of Delivery, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company or the Selling
Shareholders, shall be contemplated by the Commission, and any request on the
part of the Commission for additional information shall have been complied with
to the satisfaction of counsel for the Underwriters.
(b) At the Date of Delivery, the provisions of Sections 7(d)(i) through
7(d)(v) shall have been complied with at and as of the Date of Delivery and, at
the Date of Delivery, you shall have received certificates executed by the
Selling Shareholders, the President and the Chief Financial Officer of the
Company, dated as of the Date of Delivery, to such effect and to the effect set
forth in clauses (i), (ii) and (iii) of Section 7(d).
(c) At the Date of Delivery, you shall have received a favorable opinion
of Xxxxxxx Law Firm, P.C., counsel for the Company and the Selling Shareholders,
together with signed or reproduced copies of such opinion for each of the other
Underwriters, in form and substance satisfactory to counsel for the
Underwriters, dated as of the Date of Delivery, relating to the Option Shares
and otherwise to the same effect as the opinion required by Section 7(b).
19
(d) At the Date of Delivery, you shall have received a favorable opinion
of Baker, Donelson, Bearman & Xxxxxxxx, counsel for the Underwriters, dated as
of the Date of Delivery relating to the Option Shares and otherwise to the same
effect as the opinion required by Section 7(c).
(e) At the Date of Delivery, you shall have received a letter from Xxxxxx
Xxxxxxxx LLP, in form and substance satisfactory to you and dated as of the Date
of Delivery, to the effect that they reaffirm the statements made in the letter
furnished pursuant to Section 7(e), except that the specified date referred to
shall be a date nor more than five business days prior to the Date of Delivery.
(f) At the Date of Delivery, counsel for the Underwriters shall have been
furnished with all such documents, certificates, and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale of
the Option Shares as contemplated in this Agreement and the matters referred to
in Section 8(a) and in order to evidence the accuracy and completeness of any of
the representations, warranties, or statements of the Company and the Selling
Shareholders, the performance of any of the covenants of the Company and the
Selling Shareholders, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling
Shareholders, at or prior to the Date of Delivery in connection with the
authorization, issuance, and sale of the Option Shares as contemplated in this
Agreement shall be satisfactory in form and substance to you and to counsel for
the Underwriters.
Section 9. Indemnification and Contribution.
(a) The Company and the Selling Shareholders jointly and severally will
indemnify and hold harmless each Underwriter and the Selling Shareholders
against any losses, claims, damages, or liabilities, joint or several, to which
such Underwriter may become subject under the 1933 Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any breach of any warranty or covenant by the Company or the
Selling Shareholders herein contained or any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any "blue sky" application or other document executed by the Company or
based upon any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), 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
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
Company and the Selling Shareholders shall 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 an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by you or by any Underwriter through you expressly for use therein;
provided, further, that the Company and the Selling Shareholders will not be
liable for any such losses, claims, damages, or liabilities arising from the
sale of the Shares to any person if a copy of the Prospectus (as first filed
pursuant to Rule 424(b)) or the Prospectus as amended or supplemented by all
amendments or supplements thereto which has been furnished to the Underwriters
shall not have been sent, mailed, or given to such person, at or prior to the
written confirmation of the sale of such Shares to such person, but only if and
to the extent that such Prospectus, if so sent or delivered, would have cured
the defect giving rise to such losses, claims, damages, or liabilities. The
indemnity contained in this Section 9(a) shall not be modified or diminished by
any assertion or determination by a third party that any Underwriter has been
negligent in its due diligence obligation related to this Registration
Statement. In no event, however, shall the liability of any Selling Shareholder
for indemnification under the Section 9(a) exceed the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Shares sold hereunder
which is being sold by such Selling Shareholder, or (ii) the
20
proceeds received by such Selling Shareholder from the Underwriters in the
offering. In addition to their other obligations under this Section 9(a), the
Company and the Selling Shareholders agree that, as an interim measure during
the pendency of any such claim, action, investigation, inquiry, or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 9(a), they will
reimburse the Underwriters on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry, or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's and the Selling Shareholders obligations to reimburse the Underwriters
for such expense and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. This indemnity
agreement shall be in addition to any liabilities that the Company may otherwise
have. For purposes of this Section 9, the information set forth in the last
paragraph on the front cover page (insofar as such information related to the
Underwriters), under "Underwriting" and with respect to the size of various
trucking segments in the first paragraph of the "Industry Overview" in any
Preliminary Prospectus and in the Prospectus constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus, or the Registration Statement.
(b) Each Underwriter, severally but not jointly, will indemnify and hold
harmless the Company and the Selling Shareholders against any losses, claims,
damages, or liabilities to which the Company or the Selling Shareholders may
become subject, under the 1933 Act, 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 any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the 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 the Registration Statement, such Preliminary Prospectus, or the
Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with information furnished to the Company or the
Selling Shareholder by such Underwriter expressly for use therein; and will
reimburse the Company and the Selling Shareholders for any legal or other
expenses reasonably incurred by the Company or the Selling Shareholders or in
connection with investigating or defending any such loss, claim, damage,
liability, or action. In addition to their other obligations under this Section
9(b), the Underwriters agree that, as an interim measure during the pendency of
any such claim, action, investigation, inquiry, or other proceeding arising out
of or based upon any statement or omission, or any alleged statement or
omission, described in this Section 9(b), they will reimburse the Company and
the Selling Shareholders on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry, or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of their
obligation to reimburse the Company or the Selling Shareholders for such expense
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. This indemnity agreement shall be in
addition to any liabilities which the Underwriters may otherwise have.
The indemnity agreement in this Section 9(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer and
director of the Company and each person, if any, who controls the Company within
the meaning of the 1933 Act to the same extent as such agreement applies to the
Company.
(c) This paragraph (c) is intentionally left blank.
(d) Within ten days after receipt by an indemnified party under subsection
(a) or (b) above of notice of 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 the indemnifying party in writing of the
21
commencement thereof; no indemnification provided in this Section 9(a) or 9(b)
shall be available to any party who shall fail to give notice as provided in
this Section 9(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under this Section 9. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein, and, to the extent that it shall wish,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized by the indemnifying party,
(ii) the indemnified party shall have been advised by such counsel that there
may be a conflict of interest between the indemnifying party and the indemnified
party in the conduct of the defense of such action (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party), or (iii) the indemnifying party shall not
in fact have employed counsel to assume the defense of such action, in any of
which events such fees and expenses shall be borne by the indemnifying party.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 9(a) and 9(b) hereof,
including the amounts of any requested reimbursement payments, the method of
determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
a written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 9(a) and 9(b) hereof and will not resolve the
ultimate propriety or enforceability of the obligation to indemnify for expenses
that is created by the provisions of Sections 9(a) and 9(b).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 9 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, Selling
Shareholders and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages, and expenses of the nature contemplated by such
indemnity incurred by the Company and one or more of the Underwriters, as
incurred, in such proportions that (i) the Underwriters are responsible pro rata
for that portion represented by the underwriting discount appearing on the cover
page of the Prospectus bears to the public offering price (before deducting
expenses) appearing thereon, and (ii) the Company and the Selling Shareholders
are responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation; provided, further, that if the allocation
provided above is not permitted by applicable law, the Company, the Selling
Shareholders and the Underwriters shall contribute to the aggregate losses 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
22
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, or liabilities, as well as any other
relevant equitable considerations. Relative fault 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 by
the Underwriters and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, or liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this subsection
(f) no Selling Shareholder shall be required to contribute any amount in excess
of the lessor of (A) that proportion of the total of such losses, claims,
damages, or liabilities indemnified or contributed against equal to the
proportion of the total shares sold hereunder which is being sold by such
Selling Shareholder, or (B) the proceeds received by such Selling Shareholder
from the Underwriters in the Offering. For purposes of this Section 9(f), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
(g) The parties to this Agreement acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions of this Agreement, including without limitation, the
provisions of this Section 9, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the 0000 Xxx. The parties
are advised that federal or state public policy, as interpreted by the courts in
certain jurisdictions, may be contrary to certain of the provisions of this
Section 9, and the parties hereto hereby expressly waive and relinquish any
right or ability to assert such public policy as a defense to a claim under this
Section 9 and further agree not to attempt to assert any such defense.
Section 10. Representations and Agreements to Survive Delivery. The
representations, warranties, indemnities, agreements, and other statements of
the Selling Shareholders, the Company or its officers set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company, the Selling
Shareholders or any Underwriter or controlling person, with respect to an
Underwriter or the Company and will survive delivery of and payment for the
Shares or termination of this Agreement.
Section 11. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective (i) if at the time of execution
of this Agreement the Registration Statement has not become effective, at 10:00
A.M. eastern time on the first full business day following the effectiveness of
the Registration Statement, or (ii) if at the time of execution of this
Agreement, the Registration Statement has been declared effective, at 10:00 A.M.
eastern time on the first full business day following the date of execution of
this Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Shares for
sale to the public. For the purposes of this Section 11, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper
23
advertisement relating to the Shares or upon the release by you of telegrams or
facsimile messages (i) advising the Underwriters that the Shares are released
for public offering, or (ii) offering the Shares for sale to securities dealers,
whichever may occur first. By giving notice before the time this Agreement
becomes effective, you, as the Representative of the several Underwriters, the
Company or the Selling Shareholders, may prevent this Agreement from becoming
effective, without liability of any party to any other party, except that the
and the Selling Shareholders Company shall remain obligated to pay costs and
expenses to the extent provided in Section 6 hereof.
(b) You may terminate this Agreement by notice to the Company and the
Selling Shareholders at any time at or prior to the Closing Time (i) in
accordance with the last paragraph of Section 7 of this Agreement; (ii) if there
has been, since the respective dates as of which information is given in the
Registration Statement, any material adverse change, or any development which
might reasonably be viewed as resulting in a material adverse change in or
affecting the assets, properties, results of operation, financial condition, or
business prospects of the Company, whether or not arising in the ordinary course
of business; (iii) if there has occurred or accelerated any outbreak of
hostilities or other national or international calamity or crisis or change in
economic or political conditions the effect of which on the financial markets of
the United States is such as to make it, in your judgment, impracticable to
market the Shares or enforce contracts for the sale of the Shares; (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the NASD or NSM, or if trading generally on the New York Stock Exchange or in
the over-the-counter market has been suspended, or limitations on prices for
trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or by order of the Commission or any other
governmental authority; (v) if a banking moratorium has been declared by federal
or New York authorities; (vi) any federal or state statute, regulation, rule, or
order of any court or other governmental authority has been enacted, published,
decreed, or otherwise promulgated which in your reasonable opinion materially
adversely affects or will materially adversely affect the business or operations
of the Company; or (vii) any action has been taken by any federal, state, or
local government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the securities markets
in the United States.
(c) If this Agreement is terminated pursuant to this Section 11, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 6. Notwithstanding any such termination, the
provisions of Section 9 shall remain in effect.
Section 12. Default by One or More of the Underwriters.
(a) If any Underwriter shall default in its obligation to purchase the
Firm Shares which it has agreed to purchase hereunder, you shall use your best
efforts to arrange for you or another party or other parties to purchase such
Firm Shares on the terms contained herein. If within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such Firm
Shares, then the Company or the Selling Shareholders shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to you to purchase such Firm Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Firm Shares, or the Company
notifies you that it has so arranged for the purchase of such Firm Shares, you,
or the Company or the Selling Shareholders shall have the right to postpone the
Closing Time for a period of not more than seven days in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any persons substituted
under this Section 12 with like effect as if such person had originally been a
party to this Agreement with respect to such Firm Shares.
24
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you, the Company
or the Selling Shareholders as provided in subsection (a) above, the aggregate
number of Firm Shares which remains unpurchased does not exceed 200,000, then
the Company shall have the right to require each nondefaulting Underwriter to
purchase the Firm Shares which such Underwriter agreed to purchase hereunder
and, in addition, to require each nondefaulting Underwriter to purchase its pro
rata share (based on the number of Firm Shares which such Underwriter agreed to
purchase hereunder) of the Firm Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company as provided in subsection (a) above, the number of Firm Shares which
remains unpurchased exceeds 200,000, or if the Company shall not exercise the
right described in subsection (b) above to require nondefaulting Underwriters to
purchase Firm Shares of a defaulting Underwriter or Underwriters, then the
Company, the Selling Shareholders or you shall have the right, by written notice
within the next twenty-four (24) hours, to terminate this Agreement, without
liability on the part of any nondefaulting Underwriter, the Company or the
Selling Shareholders except for the expenses to be borne by the Company, the
Selling Shareholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 9 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
Section 13. Default by the Company or the Selling Shareholders. If the
Company or the Selling Shareholders shall fail at the Closing Time to sell and
deliver the respective aggregate number of Firm Shares that they are obligated
to sell, then this Agreement shall terminate without any liability on the part
of any nondefaulting party, except to the extent provided in Section 6 and
except that the provisions of Section 9 shall remain in effect. No action taken
pursuant to this Section shall relieve the Company or the Selling Shareholders
from liability, if any, in respect of their default.
Section 14. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, delivered, or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o Xxxxxx Xxxxxx & Company, Inc.,
00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, attention of Xx. Xxxx X. Xxxxxxx,
Xx., Senior Vice President (with a copy sent in the same manner to Baker,
Donelson, Bearman & Xxxxxxxx, 2000 First Tennessee Building, 000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, attention of Xxxxxx Xxxxxx, Esq.); and notices to the
Company and the Selling Shareholders shall be directed to Simon Transportation
Services Inc., 0000 Xxxxx 000 Xxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention
Xxxxxxx X. Xxxxx, President (with a copy sent in the same manner to Xxxxxxx Law
Firm, P.C., 000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, Attention
of Xxxx X. Xxxxxxx, Esq.). Each notice hereunder shall be effective upon
receipt by the party to which it is addressed.
Section 15. Parties. This Agreement is made solely for the benefit of the
Underwriters, the Selling Shareholders and the Company and, to the extent so
provided, any person controlling the Company or any of the Underwriters, and the
directors of the Company, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors, and
assigns and, subject to the provisions of Section 12, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the several Underwriters of the Shares.
Section 16. Governing Law and Time. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Tennessee. Unless
otherwise specified, the time of the day refers to United States Central Time.
25
Section 17. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company and the several Underwriters
in accordance with its terms.
Very truly yours,
SIMON TRANSPORTATION SERVICES INC.
By:______________________________________
Xxxxxxx X. Xxxxx, President
XXXX XXXXX TRUCKING, INC.
By:______________________________________
Xxxxxxx X. Xxxxx, President
26
SELLING SHAREHOLDERS
______________________________________
Xxxxxxx X. Xxxxx, Trustee of the
Xxxxxxx X. Xxxxx Revocable trust UTAD
2/12/93
______________________________________
Xxxxx X. Xxxxx
______________________________________
Xxx Xxxxx
______________________________________
Xxxxxxx X. Xxxxx, Xx.
______________________________________
Xxxxxx X. Xxxxx Xxxxxxx
______________________________________
Xxxxx X. Xxxx
Confirmed and accepted in Memphis,
Tennessee, as of the date first
above written, as Representative
of the Underwriters named in
Schedule 1 hereto.
XXXXXX XXXXXX & COMPANY, INC.
By:______________________________________________
Xxxx X. Xxxxxxx, Xx., Senior Vice President
27
SCHEDULE I
----------
NAME NUMBER OF FIRM SHARES
---- ---------------------
Xxxxxx Xxxxxx & Company, Inc. .........................
X.X. Xxxxxxx & Sons, Inc. .............................
Xxxxxx X. Xxxx & Company ..............................
Total Firm Shares ..................................... 2,000,000
28
