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EXHIBIT 1.1
MOTOR CARGO INDUSTRIES, INC.
2,230,000 SHARES
COMMON STOCK
(NO PAR VALUE)
UNDERWRITING AGREEMENT
____________, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇▇▇ ▇▇▇▇ LLC
As Representatives of the
Underwriters
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Motor Cargo Industries, Inc., a Utah corporation (the "Company"), ▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇▇ (collectively, the "Selling Shareholders") propose to
sell to the several underwriters named in Schedule I (collectively, the
"Underwriters") an aggregate of 2,230,000 shares of the Company's common stock,
no par value per share (the "Common Stock"), as set forth in Schedule I hereto
(such 2,230,000 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 certain of the Selling Shareholders further propose
to grant pro rata the right to said Underwriters to purchase up to an additional
334,500 shares of the Common Stock (the "Option Shares") identical to the Firm
Shares. The Firm Shares and Option Shares are herein sometimes referred to as
the "Shares." The Company operates five wholly-owned subsidiaries, Motor Cargo,
a Utah corporation, MC Distribution Services, Inc., a Utah corporation,
Interstate Commerce Collections, Inc., a Utah corporation, MC Leasing, Inc., a
Utah corporation and Ute Trucking and Leasing, L.L.C., a Utah limited liability
company (collectively, the "Subsidiaries"). The "Company" refers to Motor Cargo
Industries, Inc. and the Subsidiaries, unless the context clearly indicates
otherwise.
Section 1. Representations and Warranties of the Company, the
Subsidiaries and ▇▇▇▇. The Company, the Subsidiaries and ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇")
represent and warrant to and agree with each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-37211) 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 the 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
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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 the 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 to the best of our knowledge 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, 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.
(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 Subsidiaries have been duly incorporated or
organized and each is validly existing as a corporation or limited liability
company in good standing under the laws of its respective state of incorporation
or organization with all requisite corporate power and authority to own, lease
and license their respective properties and to conduct their respective 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 Subsidiaries taken as a whole.
The Company does not own or control, directly or indirectly, any corporation,
association or other entity, other than the Subsidiaries.
(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
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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 ▇▇▇▇ 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 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 Subsidiaries, under the
Articles of Incorporation or Bylaws or the Articles of Organization or Operating
Agreement of the Company or the Subsidiaries, or will result in a breach or
violation of any of the terms or provisions of, or constitute default by the
Company, the Subsidiaries or ▇▇▇▇ under, any indenture, mortgage, deed of trust,
loan agreement, note, lease or other agreement or instrument to which the
Company, the Subsidiaries or ▇▇▇▇ is a party or to which it or he or its or his
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, the Subsidiaries or ▇▇▇▇ or any of their respective properties.
(f) The Company has 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 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 shareholders 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 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 supporting schedules included in the
Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary -- Summary Consolidated Financial and Operating Data" and
"Selected Consolidated Financial 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.
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(h) To the Company's knowledge, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which has examined
and is reporting upon the audited financial statements and schedules included in
the Registration Statement, 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 Subsidiaries within the
meaning of the 1933 Act and the 1933 Act Regulations.
(i) Neither the Company nor the Subsidiaries has sustained, since
December 31, 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
Subsidiaries; (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 Subsidiaries; (iii) any
liability or obligation, direct or contingent, incurred or undertaken by the
Company or the Subsidiaries which is material to the business or condition
(financial or other) of the Company or the Subsidiaries, except for liabilities
or 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 the
capital stock of the Company; or (v) any transaction that is material to the
Company or the Subsidiaries, except transactions in the ordinary course of
business.
(j) Neither the Company nor the Subsidiaries is in violation of its
Articles of Incorporation or Bylaws or Articles of Organization or Operating
Agreement; and, as of the date hereof, no material default exists, and no
material 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 on
the part of the Company or the Subsidiaries 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 Subsidiaries are a
party or by which they or any of their properties are subject, and no violation
on the part of the Company or the Subsidiaries 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 Subsidiaries.
(k) Except as otherwise disclosed in the Prospectus, (i) neither the
Company nor the Subsidiaries has authorized nor conducted nor has knowledge of
the generation, transportation, storage, presence, use, treatment, disposal,
release or handling of (in an amount or of a type that has been or must be
reported to any governmental agency, violates any Environmental Law (as defined
below), or has required or could require remediation expenditures) any hazardous
substance, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any Environmental Law
(collectively, "Hazardous Materials"), on, in or under any real property owned,
leased or by any means controlled by the Company or the Subsidiaries, (ii) the
Company and the Subsidiaries are in 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 (iii) the Company and the
Subsidiaries have, and are in compliance with, all material 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 Subsidiaries has received any written or oral notice
from any governmental entity or any other person and there is no pending or to
the best of their knowledge threatened claim, litigation or any administrative
agency proceeding that: alleges that a violation of any Environmental Laws by
the Company or the Subsidiaries; alleges the Company or the Subsidiaries is a
liable party or a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 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 Subsidiaries; 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
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activities of their predecessors or third parties (whether at such 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 Subsidiaries have good and marketable title to
all real property owned by them, free and clear of all liens, encumbrances,
claims, security interests, restrictions and defects except such as are
reflected in the Prospectus. Each parcel of real property owned, leased or
controlled by the Company and the Subsidiaries 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 individually or in the aggregate have a material adverse impact on the
assets, properties, results of operation, financial condition or business
prospects of the Company or the Subsidiaries. Neither the Company, the
Subsidiaries nor ▇▇▇▇ 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
Subsidiaries.
(m) Any real property and buildings held under lease by the Company or
the Subsidiaries are held by the Company or the Subsidiaries 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 Company or the Subsidiaries; such
leases conform in material respects 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
Subsidiaries under any of the leases or affecting the rights of the Company or
the Subsidiaries to the continued possession of the leased property.
(n) Except as described in the Prospectus, there is not pending or, to
the best of the Company's, the Subsidiaries' and ▇▇▇▇'▇ knowledge threatened,
any action, suit, proceeding, inquiry or investigation, against the Company, any
of the Subsidiaries or any of their respective officers, directors or
significant shareholders or to which the properties, assets or rights of the
Company or Subsidiaries 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 assets, properties, results of operation,
financial condition or business prospects of the Company or the Subsidiaries, or
which could 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 so accurately described in all
material respects or incorporated or filed as required. The agreements to which
the Company and the Subsidiaries are parties described in the Registration
Statement and the Prospectus are valid and enforceable in all material respects
by the Company or the Subsidiaries, and, to the best of the Company's,
Subsidiaries' and Selling Shareholder's 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 Subsidiaries 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 Subsidiaries 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 Subsidiaries.
(q) The Company and the Subsidiaries 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 Subsidiaries to conduct
their business as now conducted, and as proposed to be conducted or operated as
described in the Prospectus, and neither the Company nor the Subsidiaries 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
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Intangibles which could materially and adversely affect the assets, properties,
results of operation, financial condition or business prospects of the Company
or the Subsidiaries.
(r) The systems of internal accounting controls utilized by the Company
and the Subsidiaries 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
Subsidiaries nor any employee or agent of the Company or the Subsidiaries (i)
has made any payment of funds of the Company or the Subsidiaries, (ii) received
or retained any such funds or (iii) set aside funds of the Company or the
Subsidiaries to be used for any payment in violation of any law, rule or
regulation.
(s) The Company and the Subsidiaries 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 have paid all taxes shown as due thereon;
and no tax deficiency, has been asserted against the Company or the
Subsidiaries, nor does the Company, the Subsidiaries or ▇▇▇▇ know of any tax
deficiency which is likely to be asserted against the Company or the
Subsidiaries which if determined adversely to the Company or the Subsidiaries
could materially adversely affect the assets, properties, results of operation,
financial condition or business prospects of the Company or the Subsidiaries.
All tax liabilities are adequately provided for on the books of the Company and
the Subsidiaries.
(t) Except as disclosed in the Prospectus, the Company and the
Subsidiaries maintain insurance of the types and in the amounts generally deemed
adequate for their businesses and, to the best of the Company's, Subsidiaries'
and ▇▇▇▇'▇ knowledge, consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and the
Subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, and casualty and liability insurance covering
the Company's and the Subsidiaries' operations, all of which insurance is in
full force and effect.
(u) Except as disclosed in the Prospectus; no labor problem exists with
the Company's or the Subsidiaries' employees or, to the best of the Company's,
Subsidiaries' and ▇▇▇▇'▇ knowledge, is threatened or imminent that could
materially adversely affect the Company or the Subsidiaries, and neither the
Company nor the Subsidiaries is aware of any existing, threatened or imminent
labor disturbance by the employees of any of their 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 the Subsidiaries.
(v) The Company has obtained the agreement of each of its shareholders
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 Common Stock (including, without
limitation, shares of the 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 any of its officers, directors, shareholders
or affiliates has taken or will 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 Common Stock has been registered pursuant to Section 12(g) of
the 1934 Act and 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, the Subsidiaries and ▇▇▇▇ have participated in the
preparation of the Registration Statement and Prospectus and no facts have come
to the attention of the Company, the Subsidiaries or ▇▇▇▇ which lead it or him
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.
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(z) Neither the Company, the Subsidiaries nor ▇▇▇▇ 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
▇▇▇▇, respectively, and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company, the Subsidiaries
and ▇▇▇▇, respectively, to each Underwriter as to the matters covered thereby.
Section 2. Representations and Warranties of the Selling Shareholders.
Each of the Selling Shareholders, severally and not jointly, represents and
warrants to each Underwriter and agrees that:
(a) The Selling Shareholder has all right, power and authority necessary
to execute and deliver this Agreement, to sell and deliver the Shares to be sold
by him or her hereunder and to perform all other obligations under this
Agreement; the execution, delivery and performance of this Agreement by the
Selling Shareholder 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 Shareholder 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 Shareholder, or the
Selling Shareholder's 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 Shareholder.
(b) At the Closing Time, the Selling Shareholder will have good title to
the Shares being sold by him or her 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 upon the delivery of and payment for such Shares
as contemplated herein, the Underwriters will receive good title to the Shares
purchased by them, respectively, from such Selling Shareholder, 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
Shareholder and any affiliate controlled by him or her (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 he or she beneficially
owns within 180 days after the effective date of the Registration Statement; the
Selling Shareholder has not taken, and agrees that he or she 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 Shareholder is
disposing of his or her Shares hereunder for his or her own account and is 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 Shareholder
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 will 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 Shareholder 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 each
of the Selling Shareholders, for himself or herself individually and not
jointly,
8
agrees to sell the number of Firm Shares set forth in Schedule II hereto
opposite the name of the Company or such Selling Shareholder, as the case may
be, 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 the
Selling Shareholders listed on Schedule II, attached hereto (the "Option
Shareholders") hereby grant an option to the Underwriters, severally and not
jointly, to purchase up to an additional 334,500 Option Shares in the aggregate,
in the amounts set forth opposite each of the Option Shareholder's name on
Schedule II attached hereto, 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. In the event such option is
exercised in part, such Option Shares shall be allocated among the Option
Shareholders excluding ▇▇▇▇ in accordance with the percentages set forth
opposite their names on Schedule II hereto, adjusted by you in such manner as to
avoid fractional shares. To the extent that any partial exercise of the option
exceeds the number of Option Shares offered by the Option Shareholders excluding
▇▇▇▇, then such excess Option Shares shall be allocated among ▇▇▇▇ and the
Company in accordance with the percentages set forth opposite their names on
Schedule II hereto, adjusted by you in such manner as to avoid fractional shares
. The 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be agreed upon by the
Company, the Selling Shareholder 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, the Selling Shareholder 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. in the manner set forth above, or at
such other place as the Company, certain Selling Shareholders and you shall
determine, on the Date of Delivery as specified in the notice from you to the
Company and the Selling Shareholders. Payment for the Firm Shares and the Option
Shares shall be made to the Company in same day funds via wire transfer to the
order of the Company and "____________________, as Custodian" against delivery
of certificates therefor, 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 ▇▇▇▇▇▇
▇▇▇▇▇▇ & Company, Inc. or at such other place as ▇▇▇▇▇▇ ▇▇▇▇▇▇ & 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
initial 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:
9
(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 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 reasonably
object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at its expense, as
soon as available, two 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
and has furnished or will furnish to each Underwriter, as many conformed copies
of the Registration Statement as originally filed and of each amendment thereto
as you may reasonably request (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 the Company's 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 untrue statement or omission or to make the Registration Statement
or the Prospectus comply with such requirements.
10
(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 shareholders, 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 shareholders,
statements of operations of the Company for each of the first three quarters in
the form furnished to the Company's shareholders; (ii) concurrently with
furnishing such reports to its shareholders, a balance sheet of the Company as
of the end of such fiscal year, together with statements of operations, of cash
flows and of shareholders' 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 shareholders; (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 Subsidiaries that is not so
consolidated.
(i) Except with respect to grants under the Company's 1997 Stock Option
Plan, and grants of restricted stock as described in the Prospectus, 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 the 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.
(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. Each of the Selling
Shareholders covenant:
(a) To pay all taxes, if any, on the transfer and sale of the Shares to
be sold by him or her 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
11
(c) Not to sell or offer or contract to sell or cause or permit his or
her 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 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,
and any instruments relating to any of the foregoing; (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; (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.
(b) Each of the Selling Shareholders shall pay his or her proportionate
share of all Underwriters' commissions relating to Shares of the Company sold by
such Selling Shareholder.
(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 reason of a default by any of the
Underwriters, the Company and the Selling Shareholders will reimburse the
Underwriters severally in accordance with each Selling Shareholders' respective
responsibility for costs as set forth in Section 6 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. The Company and the Selling Shareholders shall not
in any event be liable to any of the Underwriters for loss of anticipated
profits from the transactions contemplated by this Agreement.
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 as to which 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 and the
Selling Shareholders contained herein or in certificates of any officer of the
Company delivered pursuant to the provisions hereof, to the performance by the
Company and the Selling Shareholders of their respective 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).
12
(b) At the Closing Time you shall have received the opinion letter of
Van Cott, ▇▇▇▇▇▇, Cornwall & ▇▇▇▇▇▇▇▇, counsel for the Company, ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, together with signed or reproduced copies of such
opinion letters for each of the other Underwriters, in form and substance
reasonably satisfactory to Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, 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 Utah and has
the requisite corporate power and corporate authority to conduct its
business as described in the Registration Statement and the Prospectus.
To the best of such counsel's knowledge, 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, except where
the failure to be so qualified or in good standing would not have a
material adverse effect on the Company.
(ii) Each of the Subsidiaries has been duly incorporated or organized
and is validly existing as a corporation or limited liability company in
good standing under the laws of the State of Utah and has the requisite
corporate or organizational power and corporate or organizational
authority to conduct its business as described in the Registration
Statement and the Prospectus. To the best of such counsel's knowledge,
each of the Subsidiaries is duly qualified and in good standing as a
foreign corporation or limited liability company 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,
except where the failure to be so qualified or in good standing would
not have a material adverse effect on the Subsidiaries.
(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
therein described 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 Utah law,
or under any contract or other instrument known to such counsel to which
the Company is subject or by which it or its assets are bound.
(vi) To the best of such counsel's knowledge and other than as set forth
in the Prospectus, there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation,
pending or threatened in which the Company or a Selling Shareholder is a
party or of which any property of the Company or a Selling Shareholder
is the subject which, if determined adversely to the Company or the
Selling Shareholder, would be required to be disclosed in the Prospectus
or have a material adverse effect on the financial condition or results
of operations of the Company and the Subsidiaries considered as one
enterprise.
(vii) No authorization, approval or consent of any court or governmental
authority or agency of the State of Utah or the United States of America
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.
(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, the Subsidiaries or the Selling
Shareholders pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or material agreement or other instrument known
to such counsel to which the Company or the Selling Shareholders are a
party or by which it or they are bound or to which any
13
of the property of the Company or the Selling Shareholders is subject
nor will such action violate the provisions of the Articles of
Incorporation or Bylaws of the Company, or, so far as is 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 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, to such counsel's knowledge and
information, 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 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. To the best of such
counsel's knowledge, 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 has all requisite corporate power and corporate
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, the lock-up agreement, custody agreement and power
of attorney have each been duly authorized, executed and delivered by
the Company and have been duly executed and delivered by ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇, and, assuming the due authorization,
execution and delivery by the Underwriters, will be valid and binding
obligations of the Company , ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
enforceable against the Company , ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇ in accordance with their respective 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) To the best of such counsel's knowledge, neither the Company nor
the Subsidiaries is presently in breach of or default under its Articles
of Incorporation, Articles of Organization, Bylaws or Operating
Agreement and, to such counsel's actual knowledge, no material default
exists and, to the best knowledge of such counsel, 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 by
the Company or the Subsidiaries of any term, covenant or condition of
any indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument known to such counsel to which the Company
or the Subsidiaries is a party or to which any of its
14
properties is subject, in any such case where 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 and the Subsidiaries
considered as one enterprise.
(xiv) To the best of their knowledge, 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 shares of Common Stock or other securities of the Company.
(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 lead 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 belief), 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. Such counsel may state that their
belief is based on their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, and without
independent check or verification except as specified.
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 the State of Utah, 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 or one or more of
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.
(c) At the Closing Time, you shall have received a favorable opinion
from Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, 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
15
business; (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 or the Selling Shareholders, 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 and the Selling Shareholders set
forth in Section 1 and the representations and warranties of the Selling
Shareholders set forth 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: (A) 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; and (B) 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 the 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 (C)
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, respectively, 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 financial statements and any supplementary
financial information and schedules included in the Registration
Statement and covered by their opinion 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 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 supporting schedules
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 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 operating revenues, earnings before income
taxes, net earnings and earnings per common share for the five
fiscal years ended December 31, 1996, and the nine months ended
16
September 30, 1997, 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 earnings;
(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, shareholders' equity or other items
specified by the Underwriters from that set forth in the
Consolidated Balance Sheets at September 30, 1997, included in
the Prospectus, except as described in such letter;
(D) for the period from September 30, 1997 , to a specified date
not more than five days prior to the date of delivery of such
letter, there were any decreases in revenues, 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 examination referred to in their opinions 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 shareholders' 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
reasonably 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 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 opinions, 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.
17
(k) Each shareholder of the Company specified in Section 1(v) hereof
shall have agreed in writing as to the matters set forth in such section.
(l) At the Closing Time you shall have received the opinion of
____________, counsel for ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.C., counsel
for ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, together with signed or
reproduced copies of such opinion letters for each of the other Underwriters,
in form and substance reasonably satisfactory to Baker, Donelson, Bearman &
▇▇▇▇▇▇▇▇, counsel for the Underwriters, to the effect that:
(i) Neither the sale and delivery by such Selling Shareholders of the
Shares, nor the execution, delivery and performance of this Agreement,
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 such Shares of the Selling Shareholders pursuant
to any contract, indenture, mortgage, loan agreement, note, lease or
material agreement or other instrument known to such counsel to which
the Selling Shareholders are a party or by which they are bound or to
which any of such Selling Shareholders Shares are subject nor will such
action violate, so far as is 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
applicable to such Selling Shareholder known to such counsel.
(ii) This Agreement, the lock-up agreement, the custody agreement and
the power of attorney has been duly executed and delivered by each of
such Selling Shareholders, and, assuming the due authorization,
execution and delivery by the Underwriters, the other Selling
Shareholders and the Company, will be valid and binding obligations of
each of such Selling Shareholders enforceable in accordance with their
respective 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 this Agreement may be limited by federal or
state securities laws or the public policy underlying such laws. To the
knowledge of such counsel, none of the Selling Shareholders is under
duress, fraud, or undue influence at the time of executing this
Agreement, the lock-up agreement, the custody agreement and the power of
attorney and has been advised by counsel as to the financial
implications in order to evaluate the merits and risks of the
transactions contemplated hereby.
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 the State of Utah, 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 or one or more of
such Selling Shareholders, provided that copies of all such opinions,
statements or certificates shall be delivered to Underwriters' counsel.
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 Selling
Shareholders herein contained, to the performance by the Company and the Selling
Shareholders of their obligations hereunder and to the following further
conditions:
18
(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 (A), (B) and (C) of Section 7(d).
(c) At the Date of Delivery, you shall have received a favorable opinion
letter of Van Cott, ▇▇▇▇▇▇, Cornwall & ▇▇▇▇▇▇▇▇, counsel for the Company,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇, ____________, counsel for ▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.C., counsel for ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ together with signed or reproduced copies of such opinion letter 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 opinions required by Section
7(b).
(d) At the Date of Delivery, you shall have received a favorable opinion
of Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇
▇▇▇▇▇▇▇▇ 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 no 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
reasonably 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 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
of the Company 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
19
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 this 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; and (ii) the 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 pro rata basis 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'
obligation 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) and under "Underwriting" 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 specifically including but not limited to
losses, claims, damages or liabilities related to negligence on the part of the
Company and the Selling Shareholders, 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 you herein contained or 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 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 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.
20
(c) ▇▇▇▇ shall indemnify and hold harmless the Company and the
Underwriters against any losses, claims, damages or liabilities to which the
Company or the Underwriters may become subject, under the 1933 Act specifically
including but not limited to losses, claims, damages or liabilities related to
negligence on the part of the Company or the Underwriters, 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 ▇▇▇▇ herein
contained or 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 written information
furnished to the Company by ▇▇▇▇ expressly for use therein; and will reimburse
the Company and the Underwriters for any legal or other expenses reasonably
incurred by the Company or the Underwriters in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to his
other obligations under this Section 9(c), ▇▇▇▇ agrees 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(c), he will reimburse
the Company and 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
his obligation to reimburse the Company or 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 which ▇▇▇▇ may otherwise have.
The indemnity agreement in this Section 9(c) 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.
(d) Within ten days after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; no indemnification provided in
this Section 9(a), 9(b) or 9(c) 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, 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 Section 9(a), 9(b) and 9(c)
hereof, including the amounts of any requested reimbursement payments, the
21
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, which demand or notice elects the
arbitration tribunal. In the event the party demanding arbitration does not
designate 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), 9(b) and 9(c) 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), 9(b) and 9(c).
(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, the
Selling Shareholders and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity that are incurred by the Company, the Selling Shareholders and
one or more of the Underwriters 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 ▇▇▇▇ ▇▇▇) 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, each of 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 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, by each of 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 liability of any
Selling Shareholder under this Section 9(f) shall not exceed the proceeds
received by such Selling Shareholder in the Offering. 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. 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 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 ▇▇▇▇ ▇▇▇. 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 and the Underwriters 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
22
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 immediately as to Sections 6 and 9 and, as to
all other provisions, (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 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, or the Company, may prevent this Agreement from becoming
effective, without liability of any party to any other party, except that the
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; or (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; or (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; or (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; or (v) if a banking moratorium has been declared by
federal or New York, Tennessee or Utah authorities; or (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 may in your discretion 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 and the Selling Shareholders that you
have so arranged for the purchase of such Firm Shares, or the Company or the
Selling Shareholders 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.
23
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.
(b) 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 or the Selling Shareholders as provided in subsection (a) above, the
aggregate number of Firm Shares which remains unpurchased does not exceed
100,000, 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 or the Selling Shareholders as provided in subsection (a) above, the
number of Firm Shares which remains unpurchased exceeds 100,000, 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 this Agreement shall thereupon terminate,
without liability on the part of any nondefaulting Underwriter or the Company or
the Selling Shareholder except for the expenses to be borne by the Company, the
Selling Shareholder 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 its 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., Senior Vice President (with a copy sent in the same manner to Baker,
Donelson, Bearman & ▇▇▇▇▇▇▇▇, 2000 First Tennessee Building, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.); and notices to the
Company and the Selling Shareholders shall be directed to Motor Cargo
Industries, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇, Attention
▇▇▇▇▇▇▇▇ ▇▇▇▇, President (with a copy sent in the same manner to Van Cott,
▇▇▇▇▇▇, Cornwall & ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq. And ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇).
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. Specified
time of the day refers to United States Central Time.
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.
24
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, the Selling
Shareholders and the several Underwriters in accordance with its terms.
Very truly yours,
MOTOR CARGO INDUSTRIES, INC.
By:________________________________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and Chief Executive Officer
SELLING SHAREHOLDERS:
___________________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
___________________________________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
___________________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
___________________________________________________________
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
___________________________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇
___________________________________________________________
▇▇▇▇ ▇▇▇▇
___________________________________________________________
▇▇▇ ▇▇▇▇
25
Confirmed and accepted in Memphis,
Tennessee, as of the date
first above written, as
Representatives of the
Underwriters named
in Schedule I hereto.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
By:_____________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Senior Vice President
26
SCHEDULE I
Number
of
Name Shares
---- ------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. ..................................................
▇▇▇▇▇▇ ▇▇▇▇ LLC.................................................................
Total ..................................................................
27
SCHEDULE II
Percentage Percentage
Name Firm Shares Option Shares Excluding ▇▇▇▇ Including ▇▇▇▇
---- ----------- ------------- -------------- --------------
Company 1,150,000 17,250 0% 5.16%
▇▇▇▇▇▇ ▇. ▇▇▇▇ 1,000,000 37,250 0.00 11.14
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 20,000 60,000 21.43 17.93
▇▇▇▇▇▇▇ ▇▇▇▇ 20,000 20,000 7.14 5.98
▇▇▇▇ ▇▇▇▇ 20,000 100,000 35.71 29.90
▇▇▇ ▇▇▇▇ 20,000 60,000 21.43 17.93
▇▇▇▇▇▇▇▇ ▇▇▇▇ -- 20,000 7.14 5.98
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ -- 20,000 7.14 5.98