Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 82 483K
2: EX-1.1 Underwriting Agreement 33 155K
3: EX-2.4 Exhibit 2.4.1 20 56K
4: EX-2.4 Exhibit 2.4.2 14 46K
5: EX-2.4 Exhibit 2.4.3 13 44K
6: EX-3.1 Exhibit 3.1.1 1 7K
7: EX-3.1 Exhibit 3.1.2 2 8K
8: EX-4.2 Instrument Defining the Rights of Security Holders 20 86K
9: EX-11 Statement re: Computation of Earnings Per Share 2± 10K
10: EX-21 Subsidiaries of the Registrant 1 5K
11: EX-23.1 Consent of Experts or Counsel 1 6K
EXHIBIT 1.1
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
1,750,000 Shares (1)
Common Stock
UNDERWRITING AGREEMENT
December ___, 1997
CRUTTENDEN ROTH INCORPORATED
SCOTT & STRINGFELLOW, INC.
As Representatives of the Several Underwriters
18301 Von Karman, Suite 100
Irvine, California 92715
Dear Sirs:
International Airline Support Group, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with the several underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized
to act as representatives (in such capacity, the "Representatives"), as set
forth below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
Company proposes to sell to the several Underwriters an aggregate of 1,750,000
shares (the "Firm Securities") of the Company's Common Stock, $.001 par value
per share (the "Common Stock"). The Company also proposes to sell to the
several Underwriters not more than 262,500 additional shares of Common Stock if
requested by the Representatives as provided in Section 3 of this Agreement.
Any and all shares of Common Stock to be purchased by the Underwriters pursuant
to such option are referred to herein as the "Option Securities." The Firm
Securities and any Option Securities are collectively referred to herein as the
"Securities."
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agree with, each of
the several Underwriters that:
(i) a registration statement on Form S-1 (File No. 333-_______)
with respect to the Securities, including a prospectus subject to
completion, has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), and one or more amendments to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission either (A)
---------------
(1) Plus an option to purchase up to 262,500 additional shares to cover
over-allotments, if any.
if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (1)
if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify
the Preliminary Prospectus (as hereinafter defined) that it
supplements containing such information as is required or permitted by
Rules 434, 430A and 424(b) under the Act or (2) if the Company does
not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or,
if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule
430A under the Act or permitted by Rule 424(b) under the Act, and in
the case of either clause (A)(1) or (A)(2) of this sentence, as have
been provided to and approved by the Representatives prior to the
execution of this Agreement, or (B) if such registration statement, as
it may have been amended, has not been declared by the Commission to
be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment
has been furnished to and approved by the Representatives prior to the
execution of this Agreement. As used in this Agreement, the term
"Registration Statement" means the registration statement initially
filed relating to the Securities, as amended at the time when it was
or is declared effective, including all financial schedules and
exhibits thereto and including any information omitted therefrom
pursuant to Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration
statement or any amendment thereto (including the prospectus subject
to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the
term "Prospectus" means: (x) if the Company relies on Rule 434 under
the Act, the Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that such Term Sheet
supplements; (y) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule
424(b) under the Act; or (z) if the Company does not rely on Rule 434
under the Act and if no prospectus is required to be filed pursuant to
Rule 424(b) under the Act, the prospectus included in the Registration
Statement; and the term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 under the Act. Any reference
herein to the "date" of a Prospectus that includes a Term Sheet shall
mean the date of such Term Sheet.
(ii) The Commission has not issued or, to the best knowledge of
the Company, threatened or contemplated any order preventing or
suspending the use of any Preliminary Prospectus; no stop order
suspending the sale of the Securities in any jurisdiction has been
issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request
of the Commission for additional information (to be included in the
Registration Statement, any Preliminary Prospectus or the Prospectus
or otherwise) has been complied with. When any Preliminary Prospectus
was filed with the Commission it (A) contained all statements required
to be stated therein in accordance with, and complied in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to
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make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement
or any amendment thereto was or is declared effective, it (A)
contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. When the Prospectus or any Term Sheet that is a part
thereof or any amendment or supplement to the Prospectus is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or any
part thereof or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option
Closing Date (both as hereinafter defined), the Prospectus, as amended
or supplemented at any such time, (A) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (B) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph
(ii) do not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein.
(iii) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and
are in good standing under the laws of all other jurisdictions where
the ownership or leasing of their respective properties or the conduct
of their respective businesses requires such qualification, except
where the failure to be so qualified does not result in a material
adverse change in the condition (financial or otherwise), business,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(iv) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); the Company has
full power (corporate and other) and authority to enter into this
Agreement and to carry out all the terms and provisions hereof to be
carried out by it; and the Company has full power (corporate and
other) and authority to execute and deliver the warrants to purchase
Common Stock to be issued and sold to the Representatives under the
terms of the Warrant Agreement (as hereinafter defined) in accordance
with Section 5(n) hereto (the "Representatives' Warrants").
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(v) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company free
and clear of any security interests, liens, encumbrances, equities or
claims. The Warrant Agreement and the Representatives' Warrants, as
of the Closing Date, will have been duly authorized and validly
issued, and when executed and delivered by the Company will be valid
and binding obligations enforceable against the Company in accordance
with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general
equitable principles. The Common Stock issuable pursuant to the
Representatives' Warrants, when issued in accordance with the terms
thereof, will be duly authorized, validly issued, fully paid and
nonassessable. The Representatives' Warrants and the shares of Common
Stock issuable thereunder were not and will not be issued in violation
of any preemptive rights of any security holder of the Company. The
Company has reserved a sufficient number of shares of Common Stock for
issuance pursuant to the Representatives' Warrants. The holders of
the Common Stock issuable pursuant to the Representatives' Warrants
will not be subject to personal liability solely by reason of being
such holders. The issuance and sale of the Common Stock pursuant to
the Representatives' Warrants will be made in conformity with the
applicable registration requirements or exemptions therefrom under
federal and applicable state securities law.
(vi) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus). All of
the issued shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
The Firm Securities and the Option Securities have been duly
authorized and at the Firm Closing Date or the related Option Closing
Date (as the case may be), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. At
the Firm Closing Date or the Option Closing Date, no holders of
outstanding shares of capital stock of the Company will be entitled as
such to any preemptive or other rights to subscribe for any of the
Securities, and no holder of securities of the Company has any right
which has not been fully exercised or waived to require the Company to
register the offer or sale of any securities owned by such holder
under the Act in the public offering contemplated by this Agreement.
(vii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and this Agreement, the Warrant Agreement and
the Representatives' Warrants conform in all material respects to the
descriptions thereof contained in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(viii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or obligations of
the Company or any of its subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such
subsidiary, (B) warrants, rights or options to subscribe for or
purchase from the Company or any
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such subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations of the
Company or any such subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options. The information in the Registration
Statement and the Prospectus insofar as it relates to the
Representatives' Warrants, in each case as of the date on which the
Registration Statement is declared effective by the Commission, the
Closing Date and any Option Closing Date, is true, correct and
complete in all material respects.
(ix) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present the
financial position of the Company and its consolidated subsidiaries
and the results of operations and cash flows as of the dates and
periods therein specified. Such financial statements and schedules
have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the periods
involved (except as otherwise noted therein). The selected financial
data set forth under the captions "Summary Consolidated Financial
Data" and "Capitalization" in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) fairly
present, in accordance with GAAP, as applicable, on the basis stated
in the Prospectus (or such Preliminary Prospectus), the information
included therein. No other financial statements or schedules are
required to be included in the Registration Statement.
(x) Grant Thornton LLC, which has audited certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are independent public accountants as
required by the Act and the applicable rules and regulations
thereunder.
(xi) The execution and delivery of this Agreement, the Warrant
Agreement and the Representatives' Warrants have been duly authorized
by the Company; this Agreement, the Warrant Agreement and the
Representatives' Warrants have been duly executed and delivered by the
Company and are the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to rights and remedies of creditors or by general
equitable principles.
(xii) No legal or governmental proceedings are pending to
which the Company or any of its subsidiaries is a party or to which
the property of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or
the Prospectus and are not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), and,
to the Company's knowledge, no such proceedings have been threatened
against the Company or any of its subsidiaries or with respect to
any of their respective properties; and no contract or other
document is required to be described in the
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Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement that is not described therein (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) or filed as required.
(xiii) The issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement and of the
Representatives' Warrants to the Representatives by the Company
pursuant to the Warrant Agreement; the execution and delivery of this
Agreement, the Warrant Agreement and the Representatives' Warrants by
the Company; the compliance by the Company with the provisions of this
Agreement, the Warrant Agreement and the Representatives' Warrants;
and the consummation of all transactions contemplated therein do not
(A) require the consent, approval, authorization, registration or
qualification of or with any court, government or governmental
authority, domestic or foreign, except such as have been obtained,
such as may be required under state securities or blue sky laws, such
as may be required by the National Association of Securities Dealers,
Inc. (the "NASD") and, if the Registration Statement filed with
respect to the Securities (as amended) is not effective under the Act
as of the time of execution hereof, such as may be required (and shall
be obtained as provided in this Agreement) under the Act, or (B)
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the
Company or any of its subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
subsidiaries, which would have a Material Adverse Effect.
(xiv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), neither the Company nor any of its
subsidiaries has sustained any loss or interference with their
respective businesses or properties having or resulting in a Material
Adverse Effect from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding and there has not been
any event, circumstance, or development that results in, or that the
Company believes would result in, a Material Adverse Effect, except in
each case as described in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(xv) The Company has not, directly or indirectly (except for the
sale of Securities under this Agreement), (i) taken any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone
any compensation for soliciting purchases of, the Securities or (B)
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
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(xvi) (a) The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses except where the failure to possess any
such item would not have a Material Adverse Effect, and (b) neither
the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit that, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, except as described in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xvii) The Company is not an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and this
transaction will not cause the Company to become an investment company
subject to registration under the 1940 Act.
(xviii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(xix) Except for the shares of capital stock of each of the
subsidiaries owned by the Company, neither the Company nor any such
subsidiary owns any shares of stock or any other equity securities of
any corporation or has any equity interest in any firm, partnership,
association or other entity. All shares of stock or other equity
securities of the subsidiaries are wholly-owned directly or indirectly
by the Company.
(xx) The books, records and accounts of the Company and each of
its subsidiaries accurately and fairly reflect, in reasonable detail,
the transactions in and dispositions of the assets of the Company and
each of its subsidiaries, respectively. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(xxi) Except as described in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), no default exists and no event has
occurred that, with notice or lapse of time or both, would constitute
a default, in the due performance and observance of any term,
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covenant or condition of any contract, indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may
be affected, in any respect that would have a Material Adverse Effect.
The agreements to which the Company or any of its subsidiaries is a
party described in the Registration Statements are valid agreements,
enforceable by the Company or such subsidiary, except as the
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other
contracting party or parties thereto are not in material breach or
material default under any of such agreements.
(xxii) The Company has not distributed and, prior to the later
of (A) the Firm Closing Date or any Option Closing Date and (B) the
completion of the distribution of the Securities, will not distribute
any written offering material in connection with the offering and sale
of the Securities other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or Term
Sheet or any amendment or supplement thereto, or other materials, if
any, permitted by the Act.
(xxiii) The description of the Company's and its subsidiaries'
real property contained in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), is true and complete in all material respects
and the Company and its subsidiaries have good and marketable title to
all real and personal property owned by each of them, in each case
free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except for those relating to debts
of the Company or such subsidiary described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and those that do
not interfere with the use made or proposed to be made of such
property by the Company or such subsidiary, and any real property and
buildings held under lease by the Company or any such subsidiary are
held under valid, subsisting and enforceable leases (except as
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to rights
and remedies of creditors or by general equitable principles), with
such exceptions as are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the
Company or such subsidiary, in each case except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The Company and
its subsidiaries own or lease all such properties as are necessary to
its operations as now conducted and as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(xxiv) No labor dispute with the employees of the Company or
any of its subsidiaries exists or to the Company's knowledge, is
threatened or imminent that could result in a Material Adverse Effect,
except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), and the Company is not aware of an existing, imminent or
threatened
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labor disturbance by the employees of any principal suppliers,
manufacturers, contractors or others that could result in a Material
Adverse Effect, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xxv) The Company and its subsidiaries own or possess all
material trademarks, service marks, trade names, licenses, copyrights
and proprietary or other confidential information currently employed
by them in connection with their respective businesses, and neither
the Company nor any such subsidiary has received any notice of
infringement of or conflict with asserted rights of any third party
with respect to any of the foregoing which, singly or in the
aggregate, if the subject of unfavorable decisions, rulings or
findings, would have a Material Adverse Effect, except as described in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). The description of the Company's
lease, consignment and sale agreements contained in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), is true and
complete in all material respects. All such lease, consignment and
sale agreements are valid, binding and in full force and effect and
neither the Company nor any subsidiary is, or has received any notice
that it is, in default (or with the giving of notice or lapse of time
or both, would be in default) under any such lease, consignment and
sale agreements.
(xxvi) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; and neither the Company nor any
such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xxvii) The Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and is traded on the American Stock Exchange and,
upon notice of issuance, the Securities will be traded on the American
Stock Exchange, and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from
the American Stock Exchange or that could in the future cause the
Common Stock to be delisted from the American Stock Exchange, nor has
the Company received any notification that the Commission or NASD is
contemplating terminating such registration or listing. The Company
has timely filed all reports required to be filed by it under the
Exchange Act.
(xxviii) The Company has not at any time during the last five
(5) years (A) made any unlawful contribution to any candidate for
foreign office or failed to disclose fully any contribution in
violation of law, or (B) made any payment to any federal or state
governmental officer or official, or other person charged with similar
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public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction
thereof.
(xxix) Any pro forma financial or other information and
related notes included in the Registration Statement, each Preliminary
Prospectus and the Prospectus comply (or, if the Prospectus has not
been filed with the Commission, as to the Prospectus, will comply) in
all material respects with the requirements of the Act and the rules
and regulations of the Commission thereunder and present fairly the
pro forma information shown, as of the dates and for the periods
covered by such pro forma information. Such pro forma information,
including any related notes and schedules, has been prepared on a
basis consistent with the historical financial statements and other
historical information, as applicable, included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, except for
the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis to give effect to historical
and, if applicable, proposed transactions described in the
Registration Statement, each Preliminary Prospectus and the
Prospectus.
(xxx) Except as set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding loans, advances or guaranties of
indebtedness by the Company or its subsidiaries to or for the benefit
of any of (i) its "affiliates," as such term is defined in the Act and
the rules and regulations thereof or (ii) any of the members of the
families of any of them.
(xxxi) The Company and its subsidiaries have no liability,
absolute or contingent, relating to: (A) public health or safety; (B)
worker health or safety; (C) product defect or warranty (except, as to
product defect or warranty, as is disclosed in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus)); or (D) pollution, damage to
or protection of the environment, including, without limitation,
relating to damage to natural resources, emissions, discharges,
releases or threatened releases of hazardous materials into the
environment (including, further without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, use, treatment,
storage, generation, disposal, transport or handling of any hazardous
materials. As used herein, "hazardous material" includes chemical
substances, wastes, pollutants, contaminants, hazardous or toxic
substances, constituents, materials or wastes, whether solid, gaseous
or liquid in nature.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Representatives
shall be deemed a representation and warranty by the Company, respectively,
to each Underwriter, as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, (i) the Company agrees to issue and sell 1,750,000 Firm
Securities, (ii) each of the Underwriters agrees to
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purchase from the Company at a purchase price of [$ ] per share,
an aggregate number of Firm Securities set forth opposite the name of such
Underwriter in Schedule 1 hereto. One or more certificates in definitive
form for the Firm Securities that the several Underwriters have agreed to
purchase hereunder from the Company, in such denomination or denominations
and registered in such name or names as the Representatives request upon
notice to the Company at least 48 hours prior to the Firm Closing Date,
shall be delivered by or on behalf of the Company to the Representatives
for the respective accounts of the Underwriters, against payment by or on
behalf of the Underwriters of the aggregate purchase price therefor by wire
transfer in same day funds (the "Wired Funds") to the account of the
Company. Such delivery of and payment for the Firm Securities shall be
made at the offices of Cruttenden Roth Incorporated, 18301 Von Karman,
Suite 100, Irvine, California 92715, at 6:30 a.m., Pacific time, on
December _____, 1997, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives
may determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date." The
Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representatives at the offices
of the Company's transfer agent or registrar at least 24 hours prior to the
Firm Closing Date or, if available, will coordinate the transfer of the
Firm Securities to the Underwriters through the book-entry facilities of
the Depository Trust Company.
(b) For the sole purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as
contemplated by the Prospectus, on the basis of the covenants and
agreements of the Underwriters contained in this Agreement and subject to
the terms and conditions set forth in this Agreement, the Company hereby
grants to the several Underwriters an option to purchase the Option
Securities. The purchase price to be paid for any Option Securities shall
be the same price per share as the price per share for the Firm Securities
set forth above in paragraph (a) of this Section 3. The option granted
hereby may be exercised as to all or any part of the Option Securities from
time to time within 45 days after the date of the Prospectus (or, if such
45th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the American Stock Exchange is open). The Underwriters
shall not be under any obligation to purchase any of the Option Securities
prior to the exercise of such option. The Representatives may from time to
time exercise the option granted hereby by giving notice in writing or by
telephone (confirmed within 24 hours in writing) to the Company setting
forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for
delivery of and payment for such Option Securities. Any such date of
delivery shall be determined by the Representatives but shall not be
earlier than two business days or later than five business days after such
exercise of the option and, in any event, shall not be earlier than the
Firm Closing Date. The time and date set forth in such notice, or such
other time on such other date as the Representatives and the Company may
agree upon or as the Representatives may determine pursuant to Section 9
hereof, is herein called the "Option Closing Date" with respect to such
Option Securities. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters,
and, subject to the terms and conditions herein set forth, each of the
Underwriters (severally and not jointly) shall become obligated to purchase
from the Company, the same percentage of the total number of the Option
Securities as to which the several Underwriters are then exercising the
option as such Underwriter is obligated to
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purchase of the aggregate number of Firm Securities, as adjusted by the
Representatives in such manner as it deems advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph 3(b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
(d) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does
not constitute closing of a purchase and sale of the Securities. Only
execution and delivery of a receipt (by facsimile or otherwise) for the
Securities by the Underwriters indicates completion of the closing of a
purchase of the Securities from the Company. Furthermore, in the event
that the Underwriters wire funds to the Company prior to the completion of
the closing of a purchase of Securities, the Company hereby acknowledge
that until the Underwriters execute and deliver a receipt for the
Securities, by facsimile or otherwise, the Company will not be entitled to
the wired funds and shall return the wired funds received by it to the
Underwriters as soon as practicable (by wire transfer of same-day funds)
upon demand. In the event that the closing of a purchase of Securities is
not completed and the wired funds are not returned by the Company to the
Underwriters on the same day the wired funds were received by the Company,
the Company agrees to pay to the Underwriters in respect of each day the
wired funds are not returned by it, in same-day funds, interest at the
Prime Rate as stated in the Wall Street Journal on the date hereof on the
amount of such wire funds received by them.
4. Offering by the Underwriters. Upon your authorization of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, to
become effective as promptly as possible. If required, the Company will
file the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto with the Commission in the manner and
within the time period required by Rules 434 and 424(b) under the Act.
During any time when a prospectus relating to the Securities is required to
be delivered under the Act, the Company (i) will comply with all
requirements imposed upon it by the Act and the rules and regulations of
the Commission thereunder to the extent necessary to permit the continuance
of sales of or dealings in the Securities in accordance with the provisions
hereof
-12-
and of the Prospectus, as then amended or supplemented, and (ii) will not
file with the Commission the Prospectus, Term Sheet or the amendment
referred to in the second sentence of Section 2(a)(i) hereof, any amendment
or supplement to such Prospectus, Term Sheet or any amendment to the
Registration Statement of which the Representatives shall not previously
have been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Representatives
shall not have given its consent. The Company will prepare and file with
the Commission, in accordance with the rules and regulations of the
Commission, promptly upon request by the Representatives or counsel for the
Representatives, any amendments to the Registration Statement or amendments
or supplements to the Prospectus that may be deemed necessary or advisable
in connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or
the Prospectus or any amendment or supplement thereto has been filed and
will provide to the Representatives copies of each such filing.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose, or (iv) any request
made by the Commission for amending the Registration Statement, for
amending or supplementing the Prospectus or for additional information.
The Company will use its best efforts to prevent the issuance of any such
stop order and, if any such stop order is issued, to obtain the withdrawal
thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction. If, after the public offering of the Securities by the
Underwriters and during such period, the Underwriters propose to vary the
terms of offering thereof by reason of changes in general market conditions
or otherwise, the Representatives will advise the Company in writing of the
proposed variation and if, in the opinion either of counsel for the Company
or counsel for the Representatives, such proposed variation requires that
the Prospectus be supplemented or amended, the Company will forthwith
prepare and file with the Commission a supplement to the Prospectus or an
amended Prospectus setting forth such variation. The Company authorizes
the Underwriters and all dealers to whom any of the Securities may be sold
by the Underwriters to use the Prospectus, as from time to time so amended
or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act and the rules and
regulations thereunder for such period.
-13-
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
is necessary at any time to amend or supplement the Prospectus to comply
with the Act or the rules or regulations of the Commission thereunder, the
Company will promptly notify the Representatives thereof and, subject to
Section 5(a) hereof, will prepare and file with the Commission, at the
Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Representatives a signed copy of the
registration statement originally filed with respect to the Securities and
each amendment thereto (in each case including exhibits thereto), (ii) to
each other Underwriter, a conformed copy of such registration statement and
each amendment thereto (in each case without exhibits thereto) and (iii) so
long as a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request; without limiting the application of clause (iii) of
this sentence, the Company shall, as soon as practicable following the
determination of the public offering price, deliver to the Underwriters,
without charge, as many copies of the Prospectus and any amendment or
supplement thereto as the Representatives may reasonably request for
purposes of confirming orders that are expected to settle on the Firm
Closing Date. The Company will provide or cause to be provided to each of
the Representatives, and to each Underwriter that so requests in writing, a
copy of each report on Form SR filed by the Company as required by Rule 463
under the Act.
(f) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of the Representatives on behalf of the Underwriters,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer
of sale, contract of sale, pledge, grant of any option to purchase or other
sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common
Stock for a period of 180 days after the date hereof, except pursuant to
this Agreement, issuances pursuant to warrants and options outstanding
prior to the date hereof, stock options granted under the company's stock
option plan to officers, employees, directors and consultants at an
exercise price equal to fair market value and any stock issued on exercise
thereof or issuances in connection with an acquisition. If the Company
plans to issue any Common Stock or other securities in
-14-
connection with an acquisition, the Company shall provide the
Representatives with three days' advance written notice of its intention to
so issue such securities including the terms of any such proposed
transaction.
(i) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities or (ii) for a period of 180 days after the date hereof
(A) sell, bid for, purchase, or pay anyone any compensation for soliciting
purchases of, the Securities or (B) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company. The Company will not, directly or indirectly, without the prior
written consent of the Representatives on behalf of the Underwriters,
offer, purchase, offer to purchase, contract to purchase, grant any option
to sell or otherwise purchase or acquire (or announce any offer, purchase,
offer of purchase, contract to purchase, grant of any option to sell or
other purchase or acquisition of) any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 180 days after the date hereof.
(j) The Company will obtain the lockup agreements described in
Section 7(e) hereof prior to the Firm Closing Date.
(k) The Company will cause the Securities to be duly traded on the
American Stock Exchange prior to the Firm Closing Date. The Company will
use its best efforts to ensure that the Securities continue to be traded on
the American Stock Exchange following the Firm Closing Date.
(l) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to
each Underwriter who may so request in writing copies of (i) all periodic
and special reports furnished by it to stockholders of the Company, (ii)
all information, documents and reports filed by it with the Commission, the
American Stock Exchange, or the NASD, (iii) all press releases and material
news items or articles in respect of the Company, its products or affairs
released or prepared by the Company (other than promotional and marketing
materials disseminated solely to customers and potential customers of the
Company in the ordinary course of business) and (iv) any additional
information concerning the Company or its business which the
Representatives may reasonably request.
(m) The Company will use its best efforts to maintain insurance of
the types and in the amounts which it deems adequate for its business
consistent with insurance coverage maintained by companies of similar size
and engaged in similar businesses including, but not limited to, general
liability insurance covering products sold or distributed by the Company,
all real and personal property owned or leased by the Company and its
subsidiaries, and against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against.
(n) On the Closing Date, the Company will sell to the
Representatives, at a purchase price of $0.001 per warrant, warrants to
purchase 175,000 shares of Common Stock. Such Representatives' Warrants
will be issued pursuant to the terms of the Warrant
-15-
Agreement and will have an exercise price equal to [$________], subject to
adjustment, will be exercisable during the period beginning on the first
anniversary of the Effective Date and ending on the fifth anniversary of
the Effective Date and will contain customary anti-dilution and
registration rights provisions.
6. Expenses. The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the Registration Statement originally filed with
respect to the Securities and any amendment thereto, any Preliminary Prospectus
and the Prospectus and any amendment or supplement thereto, this Agreement and
any blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Representatives relating thereto, (vi) the
filing fees of the Commission and the NASD relating to the Securities, (vii) any
additional listing fees of the Securities on the American Stock Exchange, (viii)
the Company's travel expenses in connection with meetings with the brokerage
community and institutional investors and expenses associated with hosting such
meetings, including meeting rooms, meals, facilities and ground transportation
expenses, as well as any related expense for roadshow presentations transmitted
over the Internet, and (ix) the cost of preparing four bound volumes of the
public offering documents for the Representatives and their counsel. If the
sale of the Securities 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 this Agreement is terminated pursuant to Section 11
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Representatives upon demand for all
reasonable out-of-pocket expenses (including counsel fees and disbursements)
that shall have been incurred by it in connection with the proposed purchase and
sale of the Securities. The Company shall not in any event be liable to any of
the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement. If the sale of the Securities provided for herein is
consummated, the Underwriters shall pay all of their own out-of-pocket expenses
(other than fees and disbursements of their counsel for blue sky services) and
the Company shall have no obligation therefor.
7. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the sole discretion of the Representatives, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) If the Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Registration Statement or such amendment
shall have been declared effective not later than
-16-
the earlier of (i) 11:00 A.M., Pacific time, on the date on which the
amendment to the Registration Statement originally filed with respect to
the Securities or to the Registration Statement, as the case may be,
containing information regarding the offering price of the Securities has
been filed with the Commission, and (ii) such later time and date as shall
have been consented to by the Representatives; if required, the Prospectus
or any Term Sheet that constitutes a part thereof and any amendment or
supplement thereto shall have been filed with the Commission in the manner
and within the time period required by Rules 434 and 424(b) under the Act;
no stop order suspending the effectiveness of the Registration Statement or
any amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of King & Spaulding, counsel for the Company, dated the
Closing Date (and stating that it may be relied on by Berliner Zisser
Walter & Gallegos, P.C., counsel to the Representatives, in rendering their
opinion), to the effect that:
(i) the Company and each of its subsidiaries listed in Schedule
2 hereto (the "Subsidiaries") have been duly organized and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation and are duly qualified to
transact business as foreign corporations and are in good standing
under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the
failure to be so qualified does not or would not have a Material
Adverse Effect;
(ii) the Company and each of the Subsidiaries have corporate
power to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and
the Prospectus, and the Company has the corporate power to enter into
this Agreement and to carry out all the terms and provisions hereof to
be carried out by it;
(iii) the issued and outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and are owned by the Company free and
clear of any perfected security interests (other than those disclosed
in the Prospectus) and the Prospectus accurately describes, to the
extent so described, any material corporation, association, or other
entity owned or controlled, directly or indirectly, by the Company;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued and
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable,
and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities; the
Firm Securities have been duly authorized by all necessary corporate
action of the Company and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will
-17-
be validly issued, fully paid and nonassessable; no holders of
outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the
Securities; no holders of securities of the Company are entitled to
have such securities registered under the Registration Statement
except for those which have been so registered; the statements set
forth under the heading "Description of Capital Stock" in the
Prospectus, insofar as such statements purport to summarize certain
provisions of the capital stock of the Company, provide a fair summary
of such provisions; and the statements set forth under the headings
"Risk Factors - Shares Eligible for Future Sale, " "Risk Factors -
Impact of Government Regulation;" "Risk Factors - Risks Associated
with Leases," "Risk Factors - Product Liability," and "Risk Factors -
Anti-Takeover Effects of Certificate of Incorporation, Bylaws and
Delaware Law; "Blank Check" Preferred Stock," "Business - Operations
of the Company," "Business -- Regulation," "Business - Product
Liability," "Management - Stock Option Plan," "Management - Certain
Transactions," "Shares Eligible for Future Sale," "Description of
Capital Stock - Limitation of Liability and Indemnification,"
"Description of Capital Stock - Anti-Takeover Effects of Certain
Provisions of the Company's Restated Certificate of Incorporation and
Bylaws," in the Prospectus, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, provide a fair and accurate summary of such legal matters,
documents and proceedings in all material respects;
(v) the execution and delivery of this Agreement and the Warrant
Agreement have been duly authorized by all necessary corporate action
of the Company, and this Agreement and the Warrant Agreement have been
duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, are binding agreements
of the Company, enforceable in accordance with their terms, except
insofar as indemnification provisions may be limited by applicable law
and to which counsel need not express any opinion and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles;
(vi) no legal or governmental proceedings are pending to which
the Company or any of the Subsidiaries is a party or to which the
property of the Company or any of the Subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein and, to counsel's knowledge,
no such proceedings have been threatened against the Company or any of
the Subsidiaries or with respect to any of their respective
properties; no contract or other document is required to be described
in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein or
filed as required;
(vii) to counsel's knowledge, subsequent to the respective
dates as of which information is given in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), (A) the Company and its
Subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in
the ordinary course of business; and (B) the Company has not purchased
any of its outstanding
-18-
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock, except in each case as
described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus);
(viii) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement and of
warrants to the Representatives by the Company pursuant to the Warrant
Agreement; the compliance by the Company with the other provisions of
this Agreement and the Warrant Agreement; and the consummation of the
other transactions contemplated in such agreements do not (A) require
the consent, approval, authorization, registration or qualification of
or with any governmental authority, except such as have been obtained
and such as may be required under state securities or blue sky laws
and by the NASD, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any material contract, indenture, mortgage, deed of
trust, lease or other agreement or instrument known to such counsel to
which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the
Company or any of the Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator having jurisdiction over the Company or
any of the Subsidiaries; and no further approval or authorization of
the stockholders or the Board of Directors of the Company is required
for (Y) the issuance and sale of the Securities to be sold by the
Company pursuant to this Agreement or (Z) the issuance and sale of the
shares of Common Stock issuable upon exercise of the Warrant
Agreement;
(ix) the Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes
a part thereof, pursuant to Rules 434 and 424(b) has been made in the
manner and within the time period required by Rules 434 and 424(b);
and no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings
for that purpose have been instituted or, to such counsel's knowledge,
are threatened or are contemplated by the Commission;
(x) the Registration Statement originally filed with respect to
the Securities and each amendment thereto, and the Prospectus (in each
case, other than the financial statements and other financial and
statistical information contained therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules and
regulations of the Commission thereunder;
(xi) if the Company elects to rely on Rule 434, the Prospectus is
not "materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto
(including such information that is permitted to be omitted pursuant
to Rule 430A);
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(xii) the Company is not, and the transactions contemplated
by this Agreement will not cause the Company to become, an investment
company subject to registration under the 1940 Act;
(xiii) the specimen stock certificate of the Company filed as
an exhibit to the Registration Statement or incorporated by reference
from prior filings made under or pursuant to the Act is in due and
proper form to evidence shares of Common Stock, has been duly
authorized and approved by the Board of Directors of the Company and
complies with all legal requirements applicable under the Delaware
General Corporation Law;
(xiv) the descriptions in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes
are accurate and fairly present the information required to be
presented by the Act and the applicable rules and regulations
(provided that counsel need not express any opinion as to their
completeness);
(xv) except as described in the Prospectus, no holders of Common
Stock or other securities of the Company have registration rights with
respect to securities of the Company; and
(xvi) counsel has no reason to believe that the offer and sale
of all securities of the Company made within the last three years
as set forth in Item 15 of the Registration Statement were not exempt
from the registration requirements of the Act, pursuant to the
provisions set forth in such Item, and from the registration or
qualification requirements of all relevant state securities laws.
Such counsel shall also state that such counsel has participated in conferences
with officers and other representatives of the Company, the independent public
accountants of the Company, the Representatives and counsel to the
Representatives, at which conferences the contents of the Registration Statement
and the Prospectus and related matters were discussed and, they have no reason
to believe that the Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date or the date of such opinion,
included or includes any untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(except such counsel need express no view as to the consolidated financial
statements and notes thereto, schedules and reports thereon, and other financial
data included in the Registration Statement or Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deem(s) proper, on certificates or opinions of
responsible officers of the Company and public officials, and may limit its
opinions to the laws of the United States of America and the States of Georgia,
Florida and Delaware, as appropriate.
References to the Registration Statement and the Prospectus in this paragraph
(b) shall include any amendment or supplement thereto at the date of such
opinion.
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(c) The Representatives shall have received from Grant Thornton LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) they are independent accountants with respect to the Company
and its consolidated subsidiaries within the meaning of the Act and
the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and the as adjusted financial data examined by them and
included in the Registration Statement and the Prospectus comply in
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iii) on the basis of carrying out certain specified
procedures (which do not constitute an examination made in accordance
with generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
stockholders, the board of directors and any committees thereof of the
Company and each of its consolidated subsidiaries, and inquiries of
certain officials of the Company and its consolidated subsidiaries who
have responsibility for financial and accounting matters, nothing came
to their attention that caused them to believe that at a specific date
not more than five business days prior to the date of such letter,
there were any changes in the capital stock or total debt of the
Company and its consolidated subsidiaries or any decreases in total
assets or stockholders' equity of the Company and its consolidated
subsidiaries, in each case compared with amounts shown on the May 31,
1997 consolidated balance sheet included in the Registration Statement
and the Prospectus, or for the period from June 1, 1997 to such
specified date there were any decreases, as compared with the same
period in the prior year, in total revenues, net earnings or net
earnings per share, respectively, of the Company and its consolidated
subsidiaries, except in all instances for changes, decreases or
increases set forth in such letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are
included in the Registration Statement and the Prospectus, and have
compared such amounts, percentages and financial information with such
records of the Company and its consolidated subsidiaries and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation; and
(v) their review of the system of internal controls of the
Company and its consolidated subsidiaries, to the extent they deemed
necessary in establishing the scope of their examination of the
Company's financial statements as of May 31, 1997 did not disclose any
weaknesses in internal controls that they considered to be material
weaknesses.
-21-
In the event that the letters referred to above set forth any
such changes, decreases or increases which, in the reasonable
discretion of the Representatives, are likely to result in a Material
Adverse Effect, it shall be a further condition to the obligations of
the Underwriters that such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary.
References to the Registration Statement and the Prospectus in
this paragraph (c) with respect to either letter referred to above
shall include any amendment or supplement thereto by the date of such
letter.
(d) The Representatives shall have received a certificate, dated the
Firm Closing Date, of Alexius A. Dyer, III and George Murnane, III in their
capacities as the Chief Executive Officer and Chief Financial Officer,
respectively, of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Firm Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or, to the best
of the Company's knowledge, threatened or are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has sustained any loss
or interference with their respective businesses or properties having
or resulting in a Material Adverse Effect from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
there has not been any event, circumstance, or development that
results in, or that the Company reasonably believes will result in, a
Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).
(e) The Representatives shall have received from each officer and
director of the Company and the persons and entities listed in Schedule 3
an agreement to the effect that such person or entity will not, except to
the extent otherwise specifically permitted by the terms of each such
person's or entity's agreement, directly or indirectly, without the prior
written consent of the Representatives, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale,
-22-
contract of sale, pledge, grant of an option to purchase or other sale or
disposition) of any shares of Common Stock or any securities convertible
into, or exchangeable or exercisable for, shares of Common Stock for a
period of 180 days after the date of this Agreement; provided, however,
that intra-family transfers or transfers to trust for estate planning
purposes shall not be so restricted.
(f) On or before the Firm Closing Date, the Representatives and their
counsel shall have received such further certificates, documents or other
information as they may have reasonably requested from the Company.
(g) Upon consummation of the offering of the Securities, the
Securities shall have been included for trading on the American Stock
Exchange.
(h) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Berliner Zisser Walter & Gallegos, P.C., counsel for
the Representatives, with respect to the issuance and sale of the Firm
Securities, the Registration Statement and Prospectus, and such other
related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such
matters.
(i) The Company shall have executed and delivered a Warrant Agreement
in a form satisfactory to the Representatives (the "Warrant Agreement"),
and there shall have been tendered to the Representatives all of the
Representatives' Warrants described in Section 5(n) hereof to be purchased
by the Representatives on the Closing Date.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Representatives. The Company shall furnish to the
Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Representatives shall reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any losses, claims, damages or liabilities to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any breach by the Company of its representations or
warranties set forth in Section 2(a) and (b) of this Agreement;
-23-
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange
(each, an "Application");
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading; or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio, visual, electronic or
electronically transmitted materials produced by the Company or at its
direction and used in connection with the marketing of the Securities,
including without limitation, slides, videos, films, Internet
presentations, tape recordings, and, such party or parties, as the
case may be, will reimburse, as incurred, each Underwriter and each
such controlling person for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection
with investigating, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or
action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein; and provided, further, that the Company will not
be liable to any Underwriter or any person controlling such Underwriter with
respect to any such untrue statement or omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) and (e) of this
Agreement. This indemnity agreement will be in addition to any liability that
the Company may otherwise have. The Company shall not, without the prior
written consent of the Representatives, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any Underwriter or any person who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
-24-
In addition to its other obligations under this Section 8(a), the Company
agrees that, as an interim measure during the pendency of any 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 8(a), it will reimburse the Representatives and each Underwriter on a
monthly basis for all reasonable legal fees or 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
obligation to reimburse the Representatives or Underwriters for such expenses
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Representatives and
the Underwriters shall promptly return it to the party or parties that made such
payment, together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America (the "Prime
Rate"). Any such interim reimbursement payments which are not made to the
Representatives and Underwriters within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement shall be in addition to any liabilities which the Company
may otherwise have.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which
the Company or any such director, officer or controlling person of the
Company may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or any Application or (ii) the omission or
the alleged omission to state therein a material fact required to be stated
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for
use therein; and, subject to the limitation set forth immediately preceding
this clause, will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates it has been
irreparably prejudiced by such failure to receive notice.
-25-
(d) In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded or shall have been advised by its counsel that there may be one
or more legal defenses available to it and/or other indemnified parties
that conflict with those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying
party shall not be liable for the expenses of more than one separate
counsel (in addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the
Representatives in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
consent of the indemnifying party.
(e) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law,
not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters. The relative
-26-
fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters, the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if
the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (e). Notwithstanding
any other provision of this paragraph (e), no Underwriter shall be
obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or
any substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint, and as between themselves, contributions among
Underwriters shall be governed by the provisions of the Representatives'
Agreement Among Underwriters. For the purposes of this paragraph 8(e),
each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange 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 Act or Section 20 of the Exchange Act, shall have the
same rights to contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters
as described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that
-27-
any necessary changes may be made in the arrangements or documents for the
purchase and delivery of the Firm Securities or Option Securities, as the case
may be. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers, and
the several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing
Date or the related Option Closing Date, respectively, in the event that
the Company shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm
Closing Date or, such Option Closing Date, respectively,
(i) after the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse
change or development involving a prospective adverse change in or
affecting particularly the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company,
whether or not arising in the ordinary course of business, occurs
which would, in the Representatives' sole judgment, make the offering
or the delivery of the Securities impracticable or inadvisable;
(ii) trading in the Common Stock shall have been suspended by the
Commission or the American Stock Exchange or minimum or maximum prices
shall have been established on the American Stock Exchange;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
-28-
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The statements set forth in (a)
the last paragraph on the front cover page of any Preliminary Prospectus or the
Prospectus, (b) under the heading "Underwriting" in any Preliminary Prospectus
or the Prospectus and (c) on page 2 in any Preliminary Prospectus or the
Prospectus pertaining to stabilization (to the extent such statements relate to
the Underwriters) constitute the only information furnished by any Underwriter
through the Representatives to the Company for the purposes of Section 8 hereof.
The Underwriters confirm that such statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Cruttenden Roth Incorporated,
18301 Von Karman, Suite 100, Irvine, California 92715, with a copy to Scott &
Stringfellow, Inc., 909 East Main Street, Richmond, Virginia 23219, and if sent
to the Company, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at 1954 Airport Road, Suite
200, Atlanta, Georgia 30341, Attention: Chief Executive Officer.
14. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (a)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (b) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company and the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of California, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with their respective properties, generally and unconditionally,
the nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. The Company designates and appoints
Alexius A. Dyer, III and such other persons as may hereafter be selected by the
Company irrevocably agreeing in writing to so serve, as its agent to receive on
its behalf service of all process in any such proceedings in any such court,
such service being hereby acknowledged by the Company to be effective and
binding service in
-29-
every respect. A copy of any such process so served shall be mailed by
registered mail to the Company at its address provided in Section 13 hereof;
provided, however, that, unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of such
process. If any agent appointed by the Company refuses to accept service, the
Company hereby agrees that service of process sufficient for personal
jurisdiction in any action against the Company in the State of California may be
made by registered or certified mail, return receipt requested, to the Company
at its address provided in Section 13 hereof, and the Company hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Underwriter to bring
proceedings against the Company in the courts of any other jurisdiction.
17. No Rule of Construction. The parties acknowledge that this Agreement
was initially prepared by the Representatives, and that all parties have read
and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
By: ____________________________________________
Alexius A. Dyer, III
Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CRUTTENDEN ROTH INCORPORATED SCOTT & STRINGFELLOW, INC.
By: ________________________________ By: _______________________________
Name: _________________________ Name: _________________________
Title: ________________________ Title: ________________________
For themselves and as Representatives.
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Schedule 1
UNDERWRITERS
NUMBER OF
FIRM SECURITIES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
Cruttenden Roth Incorporated...........................
------------
Scott & Stringfellow, Inc. ............................
------------
Total........................................... 1,750,000
------------
------------
-31-
Schedule 2
SUBSIDIARIES
Name Jurisdiction of Incorporation
---- -----------------------------
IASG - Virgin Islands, Inc. United States
Virgin Islands
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Schedule 3
PERSONS AND ENTITIES SUBJECT TO LOCK-UP AGREEMENTS
Name
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Alexius A. Dyer, III
George Murnane, III
James M. Isaacson
Kyle R. Kirkland
E. James Mueller
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Dates Referenced Herein and Documents Incorporated by Reference
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