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EXHIBIT 1
[ ] Shares
(Subject to increase of up to [ ] additional
shares in the event of an oversubscription)
INTERNATIONAL AIRCRAFT INVESTORS
(A CALIFORNIA CORPORATION)
Common Stock
(par value $0.01 per share)
UNDERWRITING AGREEMENT
_______________, 1997
Sutro & Co. Incorporated
As Representatives of the several Underwriters
c/o Sutro & Co. Incorporated
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
International Aircraft Investors, a California corporation (the
"Company") proposes, subject to the terms and conditions stated herein, to
issue and sell, or to sell, as the case may be, to the several Underwriters
named in Schedule A hereto (the "Underwriters"), for which you are acting as
representatives (the "Representatives"), an aggregate of [ ] shares (the
"Firm Common Shares") of common stock, par value $0.01 per share (the "Common
Stock"), of the Company. In addition, the Company proposes to grant to the
Underwriters an option to purchase up to [ ] additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof, for the
purpose of covering over-allotments in connection with the sale of the Firm
Common Shares. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
The Company understands that the Underwriters propose to make a public
offering of the Common Shares on the effective date of the registration
statement hereinafter referred to or as soon thereafter as in your judgment is
advisable. The Company hereby confirms that the Underwriters and any dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus (as defined below) and are authorized to distribute the Prospectus
(as
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defined below), as from time to time amended or supplemented, on the effective
date of the registration statement hereinafter referred to or as soon thereafter
as in your judgment is advisable.
The Company confirms its agreement with respect to the purchase of the
Common Shares by the Underwriters as follows:
SECTION 1. Representations and Warranties of
the Company. The Company hereby represents and warrants to, and agrees with,
each of the Underwriters that:
(a) A registration statement on Form S-1 (File No.
333-19875) with respect to the Common Shares has been prepared by the Company
in conformity in all material respects with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission. The Company has prepared
and has filed or proposes to file prior to the effective date of such
registration statement an amendment or amendments to such registration
statement, which amendment or amendments have been or will be similarly
prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each exhibit
filed therewith. Conformed copies of such registration statement and
amendments thereto and related preliminary prospectuses have been delivered to
you in such reasonable quantities as you have requested. The Company will next
file with the Commission one of the following: (i) prior to effectiveness of
such registration statement, a further amendment thereto, including the form of
final prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b) of the Rules and Regulations or (iii) a term sheet (the "Term Sheet") as
described in and in accordance with Rules 434 and 424(b) of the Rules and
Regulations. As filed, the final prospectus, if one is used, or the Term Sheet
and the latest Preliminary Prospectus sent or given to purchasers of the Common
Shares by the Underwriters prior to or at the same time as the confirmation of
such sale, if a final prospectus is not used, shall include all Rule 430A
Information (as defined below) and, except to the extent that you shall agree
in writing to a modification, shall be in all substantive respects in the form
furnished to you prior to the date and time that this Agreement was executed
and delivered by the parties hereto, or, to the extent not completed at such
date and time, shall contain only such specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus) as
the Company shall have previously advised you in writing would be included or
made therein.
The term "Registration Statement" as used herein shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as defined below), shall also mean
such registration statement as so amended; provided, however, that such term
shall also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and (ii) any
registration statement filed pursuant to Rule 462(b) of the
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Rules and Regulations relating to the Common Shares. The term "Preliminary
Prospectus" shall mean any preliminary prospectus relating to the Common Shares
and delivered to you as well as any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" shall mean: (i) the prospectus relating to
the Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations; (ii) if a Term Sheet is
not used and no filing pursuant to Rule 424(b) of the Rules and Regulations is
required, the form of final prospectus included in the Registration Statement
at the time it becomes effective; or (iii) if a Term Sheet is used, the Term
Sheet in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations, together with the latest Preliminary
Prospectus sent or given to purchasers of the Common Shares by the Underwriters
prior to or at the same time as the confirmation of such sale. The term "Rule
430A Information" shall mean information with respect to the Common Shares and
the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of the
Act and the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration Statement
and the Prospectus, and any amendments or supplements thereto, will contain all
material statements and information required to be included therein by the Act
and the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and the Registration
Statement will not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary, in light of the circumstances under which they were made, to make
the statements therein not misleading; provided, however, no representation or
warranty contained in this subsection 1(b) shall be applicable to information
contained in or omitted from any Preliminary Prospectus, the Registration
Statement, the Prospectus or any such amendment or supplement that is described
in clauses (i) and (ii) of Section 3 hereof.
(c) The subsidiaries of the Company are IAI Atlantic
Leasing, Inc., a Nevada corporation; IAI-I, Inc., a Nevada corporation; IAI-II,
Inc., a Nevada corporation; IAI Pacific Leasing, Inc., a Nevada corporation; IAI
Alaska I Corporation, a Nevada corporation; and SWA I Corporation, a Nevada
corporation (collectively, the "Subsidiaries" and individually, a "Subsidiary").
The Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the Subsidiaries. The Company and each
of the Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of their respective jurisdiction of
incorporation, with full power and authority (corporate and
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other) to own and lease its assets and properties and conduct its business as
now being conducted and as described in the Registration Statement. The
Company owns all of the outstanding capital stock of each of the Subsidiaries
free and clear of all claims, liens, charges and encumbrances, other than as
disclosed in the Registration Statement. The Company and each of the
Subsidiaries are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which the ownership or leasing of
their respective properties or the conduct of their respective businesses
requires such qualification, except for jurisdictions in which the failure to
so qualify would not have a material adverse effect upon the Company and the
Subsidiaries, taken as a whole; and to the Company's knowledge, no proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(d) The Company and each of the Subsidiaries holds and is
operating in compliance with all licenses, approvals, certificates, permits,
authorizations, consents and orders from governmental and regulatory
authorities, foreign and domestic, which are necessary or required in the
conduct of their respective businesses.
(e) The Company has an authorized capitalization as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of capital stock of the Company are duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all applicable federal and state securities laws, have not been
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform in all material respects to
the description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
disclosed in or contemplated by the Prospectus and the financial statements of
the Company, and the related notes thereto, included in the Prospectus, none of
the Company or any Subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of capital stock of the Company or any of the
Subsidiaries or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted and
exercised thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(f) The Common Shares have been duly authorized and, when
issued, delivered and paid for in the manner set forth in this Agreement, will
be validly issued, fully paid and nonassessable, and will conform in all
material respects to the description thereof contained in the Prospectus. No
preemptive rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Common Shares. No shareholder of the
Company has any right which has not been waived to require the Company to
register the sale of any shares owned by such shareholder under the Act in the
public offering contemplated by this Agreement. The shares of Common Stock
proposed to be issued upon exercise of the Sutro Warrant (as defined below)
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have been duly authorized and, when issued, delivered and paid for in the
manner set forth in the Warrant Agreement (as defined below), will be validly
issued, fully paid and nonassessable. No further approval or authorization of
the shareholders or the Board of Directors of the Company is required for the
issuance and sale of the Common Shares as contemplated herein or the shares of
Common Stock proposed to be issued upon exercise of the Sutro Warrant.
(g) The Company has full right, power and authority to
enter into this Agreement and the Warrant Agreement and perform the
transactions contemplated in such agreements. This Agreement has and, prior to
the First Closing Date (as defined below), the Warrant Agreement will have
been, duly authorized, executed and delivered by the Company, and they
constitute the valid and binding agreements of the Company enforceable against
it in accordance with their terms, except (A) as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, (B) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding may be brought and (C)
to the extent that rights to indemnity or contribution under this Agreement or
the Warrant Agreement may be limited by federal, state or provincial securities
laws or the public policy underlying such laws. The execution and delivery of
this Agreement and the Warrant Agreement by the Company and the consummation of
the transactions contemplated in such agreements by the Company does not
violate any provisions of the certificate or articles of incorporation or
bylaws of the Company or any Subsidiary and will not conflict with, result in
the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument 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 may be bound
or affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of the Subsidiaries or any
of their respective properties. No consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement
or the Warrant Agreement or the consummation of the transactions contemplated
by such agreements, except for compliance with the Act, the Blue Sky laws
applicable to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National Association
of Securities Dealers, Inc. (the "NASD").
(h) KPMG Peat Marwick LLP, who have expressed their
opinion with respect to the financial statements filed with the Commission as a
part of the Registration Statement and included in the Prospectus, are
independent accountants as required by the Act and the Rules and Regulations.
(i) The consolidated financial statements of the Company
and its Subsidiaries, and the related notes thereto, included in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and the Subsidiaries, as of the respective
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dates of such financial statements and schedules, and the consolidated results
of operations, cash flows and shareholders' equity and the other information
purported to be shown therein of the Company and its Subsidiaries for the
respective periods covered thereby. Such statements and related notes have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as noted therein) as certified by the
independent accountants named in subsection 1(h). The Registration Statement
includes all of the financial statements and schedules required under the Act
to be included therein. The selected financial data set forth in the
Prospectus under the captions "Prospectus Summary -- Summary Consolidated
Financial Data," "Capitalization" and "Selected Consolidated Financial and
Operating Data" present fairly the information set forth therein on the basis
stated in the Registration Statement.
(j) Except as disclosed in the Prospectus, and except as
to defaults which individually or in the aggregate would not be material to the
Company and the Subsidiaries, taken as a whole, (i) none of the Company or any
of the Subsidiaries is in violation or default of any provision of their
respective certificate or articles of incorporation or bylaws, or is in breach
of or default with respect to any provision of any agreement, judgment, decree,
order, mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which it is a party or by which it or any of its properties
is bound; and (ii) there does not exist any state of facts which constitutes an
event of default (as defined in such documents) on the part of the Company or
any such Subsidiary or which, with notice or lapse of time or both, would
constitute such an event of default.
(k) There are no contracts or other documents required to
be described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which have
not been described or filed as required. The contracts so described in the
Prospectus are in full force and effect on the date hereof; and, except as
disclosed in the Prospectus and except as to defaults which individually or in
the aggregate would not be material to the Company and the Subsidiaries, taken
as a whole, neither the Company nor any of the Subsidiaries, nor to the best of
the Company's knowledge, any other party, is in breach of or in default under
any of such contracts.
(l) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of the Subsidiaries is a party or of which property
owned or leased by the Company or any of the Subsidiaries is the subject,
including actions related to environmental or discrimination matters, which
actions, suits or proceedings (i) might reasonably be expected to, individually
or in the aggregate, prevent or materially and adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business, results
of operations or prospects of the Company and the Subsidiaries, taken as a
whole, or (ii) questions the validity of any of the securities of the Company,
this Agreement or the Warrant Agreement, or of any action taken or to be taken
by the Company pursuant to or in connection with this Agreement or the Warrant
Agreement; and no labor disturbance by the employees of the Company or any of
the Subsidiaries exists or is imminent which might
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reasonably be expected to affect materially and adversely such condition,
properties, business, results of operations or prospects or the Company's
business. None of Company or any of the Subsidiaries is a party or subject to
the provisions of any material injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental body.
(m) The Company and each Subsidiary has good and valid
title to all the properties and assets reflected as owned in the financial
statements hereinabove described or as described elsewhere in the Prospectus,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except
(i) those, if any, reflected in such financial statements or as described
elsewhere in the Prospectus and (ii) those which are not material in amount and
do not materially and adversely affect the use made and proposed to be made of
such property and assets by the Company and the Subsidiaries. The Company and
each Subsidiary holds its leased properties under valid and binding leases,
with such exceptions as are not materially significant in relation to the
business of the Company and the Subsidiaries. Except as disclosed in the
Prospectus, the Company and the Subsidiaries own or lease all such properties
as are necessary to their respective operations as now conducted.
(n) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as described
in or specifically contemplated by the Prospectus: (i) neither the Company nor
any of the Subsidiaries have incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could reasonably be expected to result in a material reduction in the
future earnings of the Company and each of the Subsidiaries, taken as a whole;
(ii) the Company and the Subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
earthquake, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company and each of the
Subsidiaries are not in default in the payment of principal or interest on any
outstanding debt obligations; (iv) there has not been any change in the capital
stock (other than upon the sale of the Common Shares hereunder) or indebtedness
of the Company or any of the Subsidiaries that is material to the Company and
the Subsidiaries, taken as a whole (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company and the Subsidiaries, taken as a whole.
(o) The Company and each of the Subsidiaries have
sufficient trademarks, trade names, service marks, patent rights, mask works,
copyrights, licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") to conduct their respective businesses
as now conducted, and the Company has no knowledge of any material infringement
by any of the Company or the Subsidiaries of any Intangible of others, and
there is no claim being made against the Company or the Subsidiaries regarding
any Intangible which could have a
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material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company and the Subsidiaries, taken
as a whole.
(p) The Company has not been advised, and has no reason
to believe, that any of the Company or any Subsidiary is not conducting its
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be in compliance therewith would not
materially and adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole.
(q) The Company and each of the Subsidiaries have filed,
or applied in good faith for extensions of, all necessary federal, state and
foreign tax returns and have paid all taxes shown as due thereon; and the
Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company or the Subsidiaries which could
materially and adversely affect the business, operations or properties of the
Company and the Subsidiaries, taken as a whole.
(r) Neither the Company nor any of the Subsidiaries is,
and upon completion of the sale of Common Shares contemplated hereby will not
be, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(s) The Company has not distributed and will not
distribute prior to the First Closing Date any offering materials in connection
with the offering and sale of the Common Shares other than any Preliminary
Prospectus, the Prospectus, the Registration Statement and the other materials
permitted by the Act.
(t) The Company and each of the Subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
respective business, including, but not limited to, insurance covering
aircraft, aircraft parts and components and real and personal property owned or
leased by the Company or any Subsidiary, against loss, theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(u) Neither the Company nor any of the Subsidiaries has
at any time during the past five years (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws
of the United States or any jurisdiction thereof.
(v) All material transactions between the Company or the
Subsidiaries and their respective officers and directors and their affiliates
have been accurately disclosed in the
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Prospectus; and the terms of such transactions are fair to the Company and/or
the Subsidiaries, as the case may be.
(w) Neither the Company nor any of the Subsidiaries has
taken and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Common Shares.
Any certificate signed by any officer of the Company and delivered to
you or to your counsel shall be deemed a representation and warranty by the
Company to you as to the matters covered thereby. Any certificate delivered by
the Company to its counsel for purposes of enabling such counsel to render the
opinions referred to in Section 7(e) will also be furnished to the Underwriter
and its counsel and shall be deemed to be additional representations and
warranties by the Company to the Underwriter as to the matters covered thereby
and the Underwriter and its counsel are entitled to rely thereon.
SECTION 2. Reserved.
SECTION 3. Representations and Warranties of
the Underwriters. The Representatives, on behalf of the several Underwriters,
represent and warrant to the Company that the information set forth (i) on the
cover page of the Prospectus with respect to price, underwriting discounts and
commissions and terms of offering and (ii) under the caption "Underwriting" in
the Prospectus was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation of the Registration
Statement and the Prospectus, and such information is correct in all material
respects. The Representatives represent and warrant that they have been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on behalf of each such Underwriter and to act on behalf of
each such Underwriter in the manner herein provided.
SECTION 4. Purchase, Sale and Delivery of
Common Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter the number of Firm Common
Shares set forth herein or in Schedule A hereto, and each Underwriter agrees,
severally and not jointly, to purchase from the Company the number of Firm
Common Shares set forth opposite their respective names in Schedule A hereto.
The purchase price per share to be paid by the several Underwriters shall be
$_____ per share.
(b) Delivery of certificates for the Firm Common Shares to
be purchased by the Underwriters and payment therefor shall be made at the
offices of Sutro & Co. Incorporated, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx (or such other place as may be agreed upon by the
Company and the Representatives) at 7:00 a.m., local time, on ________, 1997
(or at such other time and date, not later than one week after such date, as may
be agreed
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upon by the Company and the Underwriters) (the "First Closing Date"); provided,
however, that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third full business day following the first date that any of the Common
Shares are released by you for sale to the public or the date that is 48 hours
after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares
shall be made by or on behalf of the Company to you, for the respective
accounts of the several Underwriters, against payment by you, for the accounts
of the several Underwriters, of the purchase price therefor by wire transfers
payable in same day funds to such account as the Company shall have designated
to the Representatives in writing at least two business days prior to the First
Closing Date. The certificates for the Firm Common Shares shall be registered
in such names and denominations as you shall have requested at least two
business days prior to the First Closing Date, and shall be made available for
checking and packaging on the business day preceding the First Closing Date at
such location in [New York, New York] as may be designated by you. Time shall
be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
(c) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 273,000 Optional
Common Shares at the purchase price per share to be paid by the Underwriters
for the Firm Common Shares, for use solely in covering any over-allotments made
by the Underwriters for the account of the Underwriters in the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) within 45 days after the first
date that any of the Common Shares are released by you for sale to the public,
upon notice by you to the Company setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
the names and denominations in which the certificates for such Optional Common
Shares are to be registered and the time and place at which such certificates
are to be delivered. Such time of delivery (which may not be earlier than the
First Closing Date and being herein referred to as the "Second Closing Date")
shall be determined by you, but if at any time other than the First Closing
Date shall not be earlier than three nor later than five full business days
after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its
name in Schedule A and the denominator of which is 1,820,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares being
purchased will be made available for checking and packaging on the business day
preceding the Second Closing Date at such location in [New York, New York] as
may be designated by you. The manner of payment for and delivery of such
Optional Common Shares shall be the same as for the Firm Common Shares
purchased from the Company as specified in
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the two preceding paragraphs. At any time before lapse of the option, you may
cancel such option by giving written notice of such cancellation to the
Company.
(d) You have advised the Company that each Underwriter
has authorized you to accept delivery of its Common Shares, to make payments
and receipt therefore. You, individually and not as the Representatives of the
Underwriters, may (but shall not be obligated to) make payments for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by you by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
(e) Subject to the terms and conditions hereof, the
Underwriters propose to make a public offering of their respective portions of
the Common Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and at the public offering price per
share (the "Offering Price") set forth on the cover page of and on the terms
set forth in the final prospectus, if one is used, or on the first page of the
Term Sheet, if one is used.
(f) On the First Closing Date, the Company shall issue
and sell to Sutro & Co. Incorporated, at a purchase price of $0.01, a warrant
(the "Sutro Warrant") entitling the holder(s) thereof to purchase from the
Company an aggregate of 182,000 shares of the Common Stock. The Sutro Warrant
shall be exercisable for a period of three (3) years commencing one (1) year
from the effective date of the Registration Statement at a price per share
equal to one hundred twenty percent (120%) of the Offering Price. The Sutro
Warrant shall be substantially in the form of the Common Stock Purchase Warrant
attached hereto as Exhibit A (the "Warrant Agreement"), which the Company and
Sutro & Co. Incorporated shall enter into on the First Closing Date, along with
a related Registration Rights Agreement substantially in the form attached
hereto as Exhibit B.
SECTION 5. Covenants of the Company. The
Company hereby covenants and agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto,
to become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing of
the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed, pursuant
to the applicable paragraph of Rule 424(b) of the Rules and Regulations within
the time period prescribed and will provide evidence satisfactory to you of
such timely filing. The Company will promptly advise you in writing (i) of the
receipt of any comments of the Commission, (ii) of any request of the
Commission for amendment of or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus or for additional information, (iii) when the Registration Statement
shall have become effective and (iv) of the issuance by the Commission
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of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose. If the Commission
shall enter any such stop order at any time, the Company will use its
commercially reasonable best efforts to obtain the lifting of such order at the
earliest possible time. The Company will not file any amendment or supplement
to the Registration Statement (either before or after it becomes effective),
any Preliminary Prospectus or the Prospectus if you have not been furnished
with a copy a reasonable time prior to such filing, if you reasonably object to
the Company filing such document or if the document to be filed is not in
compliance with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the Underwriters to continue the distribution
of the Common Shares and will use its best efforts to cause the same to become
effective as promptly as possible. The Company will fully and completely
comply with the provisions of Rule 430A of the Rules and Regulations with
respect to information omitted from the Registration Statement in reliance upon
such Rule.
(c) If at any time during which a prospectus relating to
the Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or supplements,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements, to comply with the Act or
the Rules and Regulations, the Company will promptly advise you thereof and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will use its best
efforts to cause the same to become effective as soon as possible.
(d) During such period as a prospectus is required by law
to be delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, will furnish to you or mail to your order copies of
the Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the
purposes contemplated in the Act.
(e) As soon as practicable, but not later than 50 days
after the end of the first quarter ending after the first anniversary of the
effective date of the Registration Statement (as defined in Rule 158(c) of the
Rules and Regulations), the Company will make generally available to its
security holders an earnings statement (which need not be audited) covering a
period of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last paragraph
of Section 11(a) of the Act.
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(f) The Company shall cooperate with you and your counsel
in order to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such jurisdictions as
you designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as reasonably
required for the distribution of the Common Shares. The Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation. The Company
will advise you promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your cooperation,
will use its best efforts to obtain the withdrawal thereof.
(g) For a period of five years from the First Closing
Date, the Company will furnish to the Representatives: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the consolidated balance sheet of the Company as of the
close of such fiscal year and consolidated statements of income, shareholders'
equity and cash flows for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement and annual and other report
filed by the Company with the Commission, the NASD or any securities exchange;
and (iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock.
(h) During the period of 180 days after the effective
date of the Registration Statement, without the prior written consent of Sutro
& Co. Incorporated (which consent may be withheld at the sole discretion of
Sutro & Co. Incorporated), the Company will not issue, offer, sell or otherwise
dispose of any shares of Common Stock of the Company or any securities
convertible into or exchangable for shares of Common Stock of the Company,
other than (i) the sale of the Common Shares hereunder; (ii) the issuance of
Common Stock of the Company pursuant to the exercise of options under the
Company's stock plans disclosed in the Prospectus; or (iii) the granting of
stock options after the date of the Prospectus under the Company's stock plans
disclosed in the Prospectus.
(i) The Company will apply the net proceeds of the sale
of the Common Shares substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to designate
and maintain the Common Stock for quotation on the Nasdaq National Market.
(k) The Company will file with the Commission such
reports on Form SR as may be required by Rule 463 under the Act.
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You, on behalf of the Underwriters, may, in your sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 6. Payment of Expenses. Whether or not
the transactions contemplated hereunder are consummated or this Agreement
becomes effective or is terminated, the Company agrees to pay all costs, fees
and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including without limiting the generality of the foregoing: (i) all expenses
incident to the issuance and delivery of the Common Shares (including all
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other taxes in connection with the issuance and sale of the Common Shares to
the Underwriters, (iv) all fees and expenses of counsel and independent
accountants of the Company and the Subsidiaries, (v) all costs and expenses
incurred in connection with the printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney, the Preliminary and the Final Blue Sky
Memoranda, (vi) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Common Shares for offer and sale under the U.S. state Blue Sky laws,
(vii) the NASD and any fees and expenses relating to the inclusion of the
Common Shares on the Nasdaq National Market, and (viii) all other fees, costs
and expenses referred to in Item 13 of the Registration Statement. Except as
provided in this Section 6, Section 8 and Section 10 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
exemption under the securities and Blue Sky laws and the Blue Sky Memoranda
referred to above).
SECTION 7. Conditions of the Obligations of the
Underwriters. The obligations of the several Underwriters to purchase and pay
for the Firm Common Shares on the First Closing Date and the Optional Common
Shares on the Second Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company herein set forth as
of the date hereof and as of the First Closing Date or the Second Closing Date,
as the case may be, to the accuracy of the statements of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 5:00 P.M. (or in the case of a registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the Common
Shares, not later than 10:00 P.M.), Washington, D.C. time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if the
filing of the Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b) of the
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Rules and Regulations, the Prospectus shall have been filed in the manner and
within the time period required by Rule 424(b) of the Rules and Regulations; and
prior to such Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company or you, shall be contemplated by the Commission; and any request of
the Commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to your satisfaction.
(b) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, (i) except as set forth in
or contemplated by the Registration Statement or the Prospectus, there shall
not have been any change in the capital stock of the Company or any of the
Subsidiaries or any material change in the indebtedness (other than in the
ordinary course of business) of the Company or any of the Subsidiaries, (ii)
except as set forth in or contemplated by the Registration Statement or the
Prospectus, no material verbal or written agreement or other transaction shall
have been entered into by the Company or any of the Subsidiaries, which is not
in the ordinary course of business or which could reasonably be expected to
result in a material reduction in the future earnings of the Company and the
Subsidiaries, taken as a whole, (iii) no loss or damage (whether or not
insured) to the property of the Company, or any of the Subsidiaries shall have
been sustained which materially and adversely affects the condition (financial
or otherwise), business, properties, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole, (iv) no legal or governmental
action, suit or proceeding affecting the Company or any of the Subsidiaries
which is material to the Company and the Subsidiaries, or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material adverse
change in the condition (financial or otherwise), business, properties, results
of operations or prospects of the Company and the Subsidiaries, taken as a
whole, which makes it impractical or inadvisable in your reasonable judgment to
proceed with the public offering or purchase the Common Shares as contemplated
hereby.
(c) There shall have been delivered to you the Firm
Common Shares and, if any Optional Common Shares are then being purchased, such
Optional Common Shares.
(d) The NASD, upon review of the terms of the public
offering of the Common Shares, shall not have objected to the fairness and
reasonableness of the underwriting terms and arrangements as proposed in this
Agreement.
(e) There shall have been furnished to you, as
Representatives of the Underwriters on each Closing Date, in form and substance
reasonably satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of O'Melveny & Xxxxx LLP, counsel
for the Company and each of the Subsidiaries, addressed to the
Underwriters and dated the
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First Closing Date or the Second Closing Date, as the case may be, to
the effect that:
(1) Each of the Company and each of the
Subsidiaries has been duly organized and is validly existing
in good standing under the laws of its jurisdiction of
incorporation, with corporate power to own its properties and
assets, to carry on its business as described in the
Prospectus, and, as to the Company, to enter into this
Agreement and to perform its obligations under this Agreement.
(2) The authorized and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; the outstanding shares of
the capital stock of the Company have been duly authorized by
all necessary corporate action on the part of the Company and
are validly issued, fully paid and non-assessable.
(3) The Common Shares being issued and
sold by the Company and the shares of Common Stock to be
issued by the Company upon exercise of the Sutro Warrant have
been duly authorized by all necessary corporate action on the
part of the Company and, upon payment for and delivery of such
shares in accordance with this Agreement and the Warrant
Agreement and the countersigning of the certificate or
certificates representing such shares by a duly authorized
signatory of the registrar for the Common Stock, such shares
will be validly issued, fully paid and non-assessable.
(4) The statements in the Prospectus
under the caption "Description of Capital Stock", insofar as
they summarize provisions of the Articles of Incorporation and
Bylaws of the Company, and the statements in the Prospectus
under the caption "Business -- Regulation", insofar as they
summarize matters of law, fairly present the information
required by Form S-1.
(5) The outstanding shares of the
capital stock of each Subsidiary have been duly authorized by
all necessary corporate action on the part of each such
corporation, are validly issued, fully paid and
non-assessable, and are owned of record by the Company.
(6) Holders of the capital stock of the
Company are not entitled to any preemptive right to subscribe
to any additional shares of the Company's capital stock under
the Company's Articles of Incorporation or Bylaws.
(7) The Registration Statement has
become effective under the Act and, to such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or threatened by the
Commission.
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(8) The Registration Statement and each
amendment thereto, on the date it was filed, appeared on its
face to comply in all material respects with the requirements
as to form for registration statements on Form S-1 under the
Act and the Rules and Regulations in effect at the date of
filing, except such counsel need express no opinion concerning
the financial statements and other financial information
contained therein.
(9) Such counsel does not know of any
contract or other document of a character required to be filed
as an exhibit to the Registration Statement which is not filed
as required.
(10) The execution, delivery and
performance of this Agreement and the Warrant Agreement have
been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement and the Warrant
Agreement have been duly executed and delivered by the
Company.
(11) No order, consent, permit or
approval by any California or federal governmental authority
is required on the part of the Company for the execution and
delivery of this Agreement or the Warrant Agreement, or for
the issuance and sale of the Common Shares being sold by the
Company under this Agreement or the issuance of the shares of
Common Stock upon exercise of the Sutro Warrant, except as
have been obtained under the Act and as may be required under
applicable Blue Sky or state securities laws or by the NASD.
(12) The execution and delivery by the
Company of this Agreement and the Warrant Agreement, and the
performance of the Company's obligations on or prior to the
date of this opinion under this Agreement do not (i) violate
any California or federal statute, rule or regulation that
such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Company or to
transactions of the type contemplated by this Agreement,
except that such counsel need express no opinion regarding any
federal securities laws, the Blue Sky or state securities laws
or with respect to Section 10 of this Agreement, except as
otherwise expressly stated in such counsel's opinion; or (ii)
violate, breach or result in a default under the articles or
certificates of incorporation or bylaws of the Company or any
Subsidiary or under any of the agreements, instruments,
contracts, orders, injunctions or judgments identified to such
counsel in a certificate of officers of the Company as
agreements, instruments, contracts, orders, injunctions or
judgments binding on the Company or any of the Subsidiaries
which have provisions relating to the issuance by the Company
of capital stock, except such counsel need express no opinion
regarding the effect, if any, of the issuance of the Common
Shares upon the Company's or Subsidiary's compliance with any
of the financial covenants contained in any of said
agreements, instruments, contracts, orders, injunctions or
judgments.
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(13) The Company is not an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
Except for such matters described in an attachment to
such counsel's opinion, such counsel shall state that it has not,
since January 1, 1995, given substantive attention on behalf of the
Company or any Subsidiary to, or represented the Company or any
Subsidiary in connection with, any actions, suits or proceedings
pending or threatened against the Company or any Subsidiary before any
court, arbitrator or governmental agency. Such counsel may call to
your attention the fact that its engagement is limited to specific
matters as to which it is consulted by the Company or any Subsidiary.
Such counsel shall state that in connection with such
counsel's participation in the preparation of the Registration
Statement and the Prospectus, such counsel has not independently
verified the accuracy, completeness or fairness of the statements
contained therein, and the limitations inherent in the examination
made by such counsel and the knowledge available to such counsel are
such that such counsel is unable to assume, and does not assume, any
responsibility for such accuracy, completeness or fairness (except as
otherwise specifically stated in paragraph 4 above), However, on the
basis of such counsel's review and participation in conferences in
connection with the preparation of the Registration Statement and the
Prospectus, and relying as to materiality to a large extent upon
opinions of officers and other representatives of the Company, such
counsel shall state that it does not believe that the Registration
Statement as of its effective date contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and counsel shall state that it does not believe that the
Prospectus as of its date and as of the date of such opinion,
contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. However, such counsel need express no
opinion or belief as to the financial statements and other financial
information contained in the Registration Statement or the Prospectus.
In rendering such opinions, such counsel may rely (A)
as to matters involving the application of the laws of any
jurisdiction other than the federal laws of the United States of
America, the laws of the State of California and the General
Corporation Law of the State of Nevada, to the extent deemed proper
and specified in such opinion, upon the opinion of other counsel who
are satisfactory to counsel for the Underwriters and (B) as to matters
of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
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(ii) Such opinion or opinions of Manatt, Xxxxxx &
Xxxxxxxx, LLP, counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to
the incorporation of the Company, the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require,
and the Company shall have furnished to such counsel such documents
and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the
Chief Executive Officer and the Chief Financial Officer of the
Company, dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) The representations and warranties
of the Company set forth in Section 1 of this Agreement were
true and correct as of the date of this Agreement and are true
and correct in all material respects as of the First Closing
Date or the Second Closing Date, as the case may be, and the
Company has complied in all material respects with all the
agreements and satisfied in all material respects all the
conditions on its part to be performed or satisfied on or
prior to such Closing Date.
(2) The Commission has not issued any
order preventing or suspending the use of the Prospectus or
any Preliminary Prospectus filed as a part of the Registration
Statement or any amendment or supplement thereto; no stop
order suspending the effectiveness of the Registration
Statement has been issued; and to the best of the knowledge of
the respective signers, no proceedings for that purpose have
been instituted or are pending or contemplated under the Act.
(3) Each of the respective signers of
the certificate has carefully examined the Registration
Statement and the Prospectus; in his opinion and to the best
of his knowledge, the Registration Statement and the
Prospectus and any amendments or supplements thereto contain
all statements required to be stated therein regarding the
Company; and neither the Registration Statement nor the
Prospectus nor any amendments or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading.
(4) Since the initial date on which the
Registration Statement was filed, no agreement, whether
written or oral, transaction or event has occurred which
should have been set forth in an amendment to the Registration
Statement
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or in a supplement to or amendment of any prospectus which has
not been disclosed in such a supplement or amendment.
(5) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, and except as disclosed in or contemplated by
the Prospectus, there has not been any material adverse change
or a development involving a material adverse change in the
condition (financial or otherwise), business, properties,
results of operations, management or prospects of the Company
and the Subsidiaries; and no legal or governmental action,
suit or proceeding is pending or threatened against the
Company or any Subsidiary which is material to the Company and
the Subsidiaries, whether or not arising from transactions in
the ordinary course of business, or which may adversely affect
the transactions contemplated by this Agreement; since such
dates and except as so disclosed, the Company and the
Subsidiaries have not entered into any verbal or written
agreement or other transaction which could result in a
material reduction in the future earnings of the Company and
the Subsidiaries or incurred any material liability or
obligation, direct, contingent or indirect, made any change in
its capital stock, made any material change in its short-term
debt or funded debt or repurchased or otherwise acquired any
of the Company's capital stock; and the Company has not
declared or paid any dividend, or made any other distribution,
upon its outstanding capital stock payable to shareholders of
record on a date prior to the First Closing Date or Second
Closing Date; and
(6) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus and except as disclosed in or contemplated by
the Prospectus, the Company and its Subsidiaries have not
sustained a material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not
insured).
(iv) On the date before this Agreement is executed
and also on each Closing Date, a letter addressed to you, as
Representatives of the Underwriters, from KPMG Peat Marwick LLP,
independent accountants, the first one to be dated the date of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a second closing hereunder) to be dated the
Second Closing Date, in form and substance reasonably satisfactory to
you, to the effect that they are independent public accountants with
respect to the Company within the meaning of the Act and the related
Rules and Regulations, and containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus.
(v) On or before the First Closing Date, letters
from certain shareholders and each director and executive officer of
the Company, in form and substance reasonably
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satisfactory to you, (i) confirming that for a period of 180 days from
the date of the Prospectus, such person will not, directly or
indirectly, offer to sell, contract to sell or otherwise sell, dispose
of, loan, pledge or grant any rights or options with respect to (each,
a "Disposition") any shares of the Common Stock, any options or
warrants to purchase any shares of the Common Stock or any securities
convertible into or exercisable or exchangeable for shares of the
Common Stock, whether then owned or thereafter acquired by such person
or with respect to which such person has or thereafter acquires the
power of disposition, or transfer, in any manner, all or a portion of
the economic consequences associated with the ownership of such Common
Stock, any options or warrants to purchase any shares of the Common
Stock or any securities convertible into or exercisable or
exchangeable for shares of the Common Stock, otherwise than (i) as a
bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by the terms of such letter, (ii) as a
distribution to partners or shareholders of such person, provided that
the distributees thereof agree in writing to be bound by the terms of
such letter, or (iii) with the prior written consent of the
Representatives, which consent may be withheld in the sole discretion
of the Representatives.
(f) On or before the date any of the Common Shares are
released by the Representatives for sale to the public and on the First Closing
Date, the Common Shares shall be authorized for quotation on the Nasdaq
National Market.
(g) The Common Shares shall be qualified for sale in such
States and jurisdictions as the Representatives may reasonably request, each
such qualification shall be in effect and not subject to any stop order or
other proceeding on the First Closing Date and the Second Closing Date.
(h) On or before the Closing Date, the Company shall have
executed and delivered to Sutro & Co. Incorporated, the Warrant Agreement,
substantially in the form of Exhibit A hereto, and the Registration Rights
Agreement, substantially in the form of Exhibit B hereto.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory to you and to Manatt, Xxxxxx & Xxxxxxxx, LLP, counsel for the
Underwriters. The Company shall furnish you with such manually signed or
conformed copies of such opinions, certificates, letters and documents as you
request.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company without liability on the part of you or any Underwriter or the Company
except for the expenses to be paid or reimbursed by the Company pursuant to
Sections 6 and 8 hereof and except to the extent provided in Section 10 hereof.
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SECTION 8. Reimbursement of Underwriters'
Expenses. Notwithstanding any other provisions hereof, if this Agreement shall
be terminated by you pursuant to Section 7 or Section 13b(iii) or (iv) hereof,
or if the sale to the Underwriters of the Firm Common Shares at the First
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse you and the other
Underwriters upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by them in connection with the proposed purchase and the
sale of the Firm Common Shares, including but not limited to reasonable fees
and disbursements of counsel, printing expenses, travel expenses, postage and
telephone charges relating directly to the offering contemplated by the
Prospectus. Any such termination shall be without liability of any party to
any other party except that the provisions of this Section and Section 6 and
Section 10 hereof shall at all times be effective and shall apply.
SECTION 9. Effectiveness of Registration
Statement. You and the Company will use your and its respective best efforts
to cause the Registration Statement to become effective, to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 10. Indemnification and Contribution.
(a) The Company agrees to (i) indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any
of them not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained
herein or any failure of the Company to perform its obligations hereunder or
under law; and (ii) reimburse each Underwriter and each such controlling person
for any legal and other expenses as such expenses are reasonably incurred by
such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made (i) in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance
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23
upon and in conformity with the information furnished to the Company pursuant
to Section 3 hereof; or (ii) in any Preliminary Prospectus if a copy of the
Prospectus (or the Prospectus as then amended or supplemented) was not sent or
given by or on behalf of the Underwriters to such person at or prior to the
written confirmation of the sale of such Common Shares to such person in any
case where such delivery is required by the Act, such untrue statement
contained in or omission from such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as so amended or supplemented) and the Company
had previously furnished copies of such corrected Prospectus to the
Underwriters.
In addition to its other obligations under this
Section 10(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 untrue statement or omission, or any alleged
untrue statement or omission, or any inaccuracy in the representations and
warranties of the Company or any failure to perform its obligations hereunder,
all as described in this Section 10(a), the Company will reimburse each
Underwriter (and to the extent applicable each controlling person) on a
quarterly basis for all reasonable legal 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 each Underwriter (and to the extent applicable each
controlling person) 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, each Underwriter (and to the extent applicable each controlling
person) shall promptly return it to the Company 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 NT&SA, SAN FRANCISCO], California (the
"Prime Rate"). Any such interim reimbursement payments which are not made to
an Underwriter within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter agrees to severally indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses to which the Company or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, in each case to the extent, but only to the
extent, that
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such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 3
hereof; and will reimburse the Company and each such director, officer or
controlling person for any legal and other expenses, as such expenses are
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In addition
to its other obligations under this Section 10(b), each Underwriter severally
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
untrue statement or omission, or any alleged untrue statement or omission,
described in this Section 10(b) which relates to information furnished to the
Company pursuant to Section 3 hereof; it will reimburse the Company and each
such officer, director or controlling person on a quarterly basis for all
reasonable legal 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 Underwriters' obligation to reimburse the Company and
each such officer, director or controlling person 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 Company and each
such officer, director or controlling person shall promptly return it to the
Underwriters, together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made
to the appropriate person within 30 days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party in writing 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
otherwise than under the indemnity agreement contained in this Section or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise
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participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Underwriters in the case of paragraph (a) of
this Section 10, representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. An indemnifying party shall not be liable
for any settlement of any action, suit, proceeding or claim effected without
its written consent, which will not be unreasonably withheld.
(d) If the indemnification provided for in this Section
10 is required by its terms but is for any reason held to be unavailable to
hold harmless an indemnified party under subsections (a), (b) or (c) of this
Section 10 in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Underwriters from the offering of the Common Shares and the relative fault
of the Company and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company and the Underwriters shall
be deemed to be in the same proportion, in the case of the Company, as the
total price paid to the Company for the Common Shares sold by it to the
Underwriters (net of underwriting commissions but before deducting expenses),
and, in the case of the Underwriters, as the underwriting commissions received
by them, bears to the total of such amounts paid to the Company and the amounts
received by the Underwriters as underwriting commissions. The relative fault
of the Company and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
subsection (c) of this Section 10, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
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The provisions set forth in subsection (c) of this Section 10
with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subsection (d); provided, however, that
no additional notice shall be required with respect to any action for which
notice has been given under subsection (c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 10 were determined solely by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 10, no Underwriter
shall be required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it. 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 pursuant to
this Section 10 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 10(a)
and 10(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein selecting the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 10(a) and 10(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 10(a) and 10(b) hereof.
SECTION 11. Default of Underwriters. It shall be a
condition to this Agreement and the obligations of the Company to sell and
deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for
all the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Underwriters of such shares in accordance with the terms hereof.
If applicable, if any Underwriter or Underwriters default in their obligations
to purchase Common Shares hereunder on either the First or Second Closing Date,
and the aggregate number of Common Shares which such defaulting entity agreed
but failed to purchase on such Closing Date does not exceed 10% of the total
number of Common Shares which the Underwriters are obligated to purchase on
such Closing Date, the nondefaulting entities shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting entities agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so
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27
default and the aggregate number of Common Shares with respect to which such
default occurs is more than the above percentage, and arrangements satisfactory
to you and the Company for the purchase of such Common Shares by other persons
are not made within two full business days after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter
or the Company, except for the expenses to be paid by the Company pursuant to
Section 6 hereof and except to the extent provided in Section 10 hereof.
If applicable, in the event that Common Shares to which a
default relates are to be purchased by a nondefaulting Underwriter or by
another person or persons, the Representatives shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus, this Agreement and any other documents, as well as any
other arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 12. Effective Date. This Agreement shall become
effective immediately as to Sections 6, 8, 10, 13 and 14 hereof and, as to all
other provisions, (i) if at the time of execution of this Agreement the
Registration Statement has not become effective, at 6:30 a.m., California time,
on the first full business day following the effectiveness of the Registration
Statement, or (ii) if at the time of execution of this Agreement the
Registration Statement has been declared effective, at 6:30 a.m., California
time, on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Common
Shares for sale to the public. For the purposes of this Section 12, the Common
Shares shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Common Shares or
upon the release by you of notices (i) advising Underwriters that the Common
Shares are released for public offering, or (ii) offering the Common Shares for
sale to securities dealers, whichever may occur first.
SECTION 13. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company or by
you by notice to the other parties hereto at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to you or any
Underwriter (except for the expenses to be paid by the Company pursuant to
Section 6 hereof and except to the extent provided in Section 10 hereof) or of
you or any Underwriter to the Company (except to the extent provided in Section
10 hereof).
(b) This Agreement may also be terminated by you prior to
the First Closing Date by notice to the Company (i) if material governmental
restrictions, not in force and effect
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on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established on
the New York Stock Exchange or on the American Stock Exchange or in the over
the counter market by the NASD, or trading in securities generally shall have
been suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by federal,
New York or California authorities, (ii) if an outbreak of major hostilities or
other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated or escalated to such an extent, as, in the reasonable judgment of
the Representatives, to affect materially and adversely the marketability of
the Common Shares, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or the Prospectus or which
is not reflected in the Registration Statement or the Prospectus but should be
reflected therein in order to make the statements or information contained
therein not misleading in any material respect or (iv) if there shall be any
action, suit or proceeding pending or threatened, or there shall have been any
development or prospective development involving particularly the business or
properties or securities of the Company or any of the Subsidiaries or the
transactions contemplated by this Agreement, which, in the reasonable judgment
of the Representatives, may materially and adversely affect the Company's
business or earnings and makes it impracticable or inadvisable to offer or sell
the Common Shares. Any termination pursuant to this Section 13(b) shall be
without liability on the part of any Underwriter to the Company or on the part
of the Company to you or any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company, its officers and the several Underwriters
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company, or any of its or their partners, officers or directors or any
controlling persons, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder.
SECTION 15. Notices. All communications hereunder shall
be in writing and, if sent to the Underwriters, shall be mailed, delivered or
telecopied and confirmed to you at 0000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, with a copy to Manatt, Xxxxxx & Xxxxxxxx, LLP,
00000 X. Xxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X.
Xxxxxx, Esq., FAX: (000) 000-0000; if sent to the Company, shall be mailed,
delivered or telecopied and confirmed to the Company at 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, FAX: (000) 000-0000, with a copy to O'Melveny & Xxxxx LLP, 000 Xxxxx
Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx,
Esq., FAX: (000) 000-0000. The Company or you may change the address for
receipt of communications hereunder by giving notice to the others.
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SECTION 16. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 11 hereof, and to the benefit of the officers
and directors and controlling persons referred to in Section 10 hereof, and in
each case their respective successors, personal representatives and assigns,
and no other person will have any right or obligation hereunder. No such
assignment shall relieve any party of its obligations hereunder. The term
"successors" shall not include any purchaser of the Common Shares as such from
any of the Underwriters merely by reason of such purchase.
SECTION 17. Representation of Underwriters. You will act
as Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you,
as Representatives, will be binding upon all the Underwriters.
SECTION 18. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 19. Applicable Law. This Agreement shall be
governed by and construed in accordance with the internal laws (and not the
laws pertaining to conflicts of laws) of the State of California.
SECTION 20. General. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in several counterparts, each one of which shall be an original, and
all of which shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The Section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company and you.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement between the Company and you, all
in accordance with its terms.
Very truly yours,
INTERNATIONAL AIRCRAFT INVESTORS
By:______________________________
Xxxxxxx X. Xxxxxxx,
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in Los Angeles, California as of
the date first above written.
SUTRO & CO. INCORPORATED
As Representatives of the several Underwriters
By Sutro & Co. Incorporated
By: _____________________________
Its:_____________________________
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SCHEDULE A
SCHEDULE OF UNDERWRITERS
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . .
[NAMES OF OTHER UNDERWRITERS]. . . . . . . . . . . . . . . .
---------------
Total. . . . . . . . . . . . . . . . . . . . . . . .
===============
32
EXHIBIT A
WARRANT AGREEMENT
33
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS
THEREFROM. THE HOLDER MAY NOT OFFER, SELL, TRANSFER, ASSIGN, PLEDGE,
HYPOTHECATE, OR OTHERWISE DISPOSE OF OR ENCUMBER THE SECURITIES REPRESENTED BY
THIS DOCUMENT EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE ISSUER
OF AN OPINION OF LEGAL COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE
ISSUER AND ITS LEGAL COUNSEL THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT,
PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OR ENCUMBRANCE IS EXEMPT FROM THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER AND THE REGISTRATION AND/OR QUALIFICATION PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
Warrant to Purchase up to [ ] Shares of Common Stock (subject to
adjustment)
INTERNATIONAL AIRCRAFT INVESTORS
COMMON STOCK PURCHASE WARRANT
Void after April ___, 2001
This certifies that, for value received, Sutro & Co. Incorporated, a
Delaware corporation, or its transferee(s) as provided herein (in any event,
the "Holder") is entitled, subject to the terms set forth below, to purchase
from International Aircraft Investors, a California corporation (the
"Company"), one hundred and [ ] ([ ]) shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), as
constituted on the date hereof, upon surrender hereof with the Notice of
Exercise attached hereto (the "Notice of Exercise") duly executed, and
simultaneous payment therefor in lawful money of the United States or otherwise
as hereinafter provided, at the exercise price as set forth in Section 2
hereof. The number, character, and exercise price of such shares of Common
Stock are subject to adjustment as provided below.
1. TERM OF WARRANT. Subject to the terms and conditions set
forth herein, this Warrant shall become exercisable on ____, 1998, and
shall remain exercisable until 5:00 p.m. Pacific time on ___, 2001, and
shall be void thereafter.
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2. EXERCISE AND ADJUSTMENTS.
2.1 Exercise Price. The exercise price at which this
Warrant may be exercised is ________________________ ($_____) per share of
Common Stock, subject to adjustment as set forth herein (as adjusted, the
"Exercise Price").
2.2 Adjustment for Stock Splits and Combinations. If the
Company should, at any time or from time to time after the date hereof, fix a
record date for a split, subdivision, or combination of the outstanding shares
of Common Stock, then as of such record date (or the date of such stock split,
subdivision, or combination if no record date is fixed) the number of shares of
Common Stock that this Warrant is exercisable to purchase as of such time shall
be adjusted to be the same number of shares of Common Stock that the Holder
would have if this Warrant had been exercised immediately prior to such split,
subdivision, or combination. The Exercise Price shall be adjusted to be the
then Exercise Price multiplied by a fraction, the numerator of which is the
number of shares of Common Stock purchasable under this Warrant immediately
prior to such stock split, subdivision, or combination, and the denominator of
which is the number of shares of Common Stock purchasable by this Warrant
immediately after such event.
2.3 Adjustment for Dividends in Stock or Other Securities
or Property. If the Company should, at any time or from time to time after the
date hereof, fix a record date for the determination of eligible stockholders
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend,
then and in each case, this Warrant shall represent the right to acquire, in
addition to the number of shares of the Common Stock receivable upon exercise
of this Warrant, and without payment of any additional consideration therefor
upon such exercise, the amount of such other or additional stock or other
securities or property (other than cash) of the Company receivable upon payment
of such dividend as a holder of the number of shares of Common Stock for which
this Warrant would have been exercisable immediately prior to such record date
would have had been entitled to receive, and had such holder thereafter, during
the period from the date of payment of such dividend to and including the date
of exercise of this Warrant, retained such shares and/or all other additional
stock payable in such dividend or dividends during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 2.
2.4 Adjustment for Reclassification, Exchange, or
Substitution. If the Common Stock issuable upon the exercise of this Warrant
shall be changed into the same or different number of shares of any class or
classes of stock, whether by reclassification, exchange, substitution, or
otherwise (other than a stock split, combination or dividend provided for in
Sections 2.2 or 2.3 hereof, or a reorganization, merger, consolidation, or sale
of assets provided for in Section 2.5 hereof), then and in such event the
Holder shall have the right thereafter to receive upon exercise of this
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, exchange, substitution, or
other change as a holder of the number of shares of Common Stock for which this
Warrant would have been exercisable immediately prior to such reclassification,
exchange, substitution, or other change would have had.
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2.5 Reorganization, Merger, Consolidation, or Sale of
Assets. If at any time or from time to time, there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification, or exchange of shares provided for elsewhere in this Section
2) or a merger or consolidation of the Company with or into another entity
where the Company is not the surviving entity, or the sale of all or
substantially all of the Company's assets to any other person, then as a part
of such reorganization, merger, consolidation, or sale, effective provision
shall be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant the number of shares of stock or other securities,
instruments or property of the Company or of the successor entity resulting
from such merger, consolidation, or sale to which a holder of the Common Stock
issuable upon exercise of this Warrant would have been entitled upon such
capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 2.5 with respect to the rights of the Holder after such
reorganization, merger, consolidation, or sale to the end that the provisions
of this Section 2 (including adjustment of the exercise price then in effect)
shall be applicable after that event as nearly equivalent as may be
practicable. The provisions of this Section 2.5 shall similarly apply to
successive reorganizations, mergers, consolidations or sale of assets, and to
the stock, securities or instruments of any other entity which are at the time
receivable upon the exercise of this Warrant.
2.6 Limits on Adjustments. No adjustment in the Exercise
Price shall be required unless such an adjustment would require an increase or
decrease of at least five cents ($0.05) in such price; provided, however, that
any adjustments which by reason of this Section 2.6 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 2 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. Notwithstanding anything
in this Section 2 to the contrary, the Exercise Price shall not be reduced to
less than the then existing par value of the Common Stock as a result of any
adjustment made hereunder.
2.7 No Impairment. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 2.
2.8 Notice.
(a) Whenever an adjustment is to be made pursuant
to Sections 2.2, 2.3, 2.4 or 2.5 hereof, the Company shall issue and promptly
provide to the Holder a certificate signed by the Company's Secretary setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated and the
exercise price and number of shares or amount of property purchasable
hereunder, after giving effect to such adjustment.
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(b) In case (i) the Company shall take a record
of the holders of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of entitling them
to receive any dividend or other distribution, or any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to
receive any other right, (ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another entity, or any sale, lease or
conveyance of all or substantially all of the assets of the Company to another
person, or (iii) of any voluntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will promptly provide to the
Holder a notice specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or such stock or securities at the time receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. The Company shall provide
such notice at least ten (10) days prior to the date therein specified.
3. EXERCISE OF WARRANT.
3.1 Manner of Exercise. The purchase rights represented
by this Warrant are exercisable by the Holder in whole or in part, but not for
less than one hundred (100) shares at a time (or such lesser number of shares
which may then constitute the maximum number purchasable; such number being
subject to adjustment as provided in Section 2 hereof), at any time or from
time to time during the term hereof as described in Section 1 hereof, by the
surrender of this Warrant and the Notice of Exercise annexed hereto duly
completed and executed on behalf of the Holder, at the office of the Company
(or such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of
the Company), upon payment (i) in cash or other immediately available funds
acceptable to the Company, (ii) by cancellation by the Holder of indebtedness
of the Company to the Holder, or (iii) by a combination of (i) and (ii), of the
purchase price of the shares of Common Stock to be purchased.
3.2 Effect of Exercise. This Warrant shall be deemed to
have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided in Section 3.1 hereof and the persons
entitled to receive the shares of Common Stock issuable upon such exercise
shall be treated for all purposes as the holders of record of such shares as of
the close of business of such date. As promptly as practicable on or after
such date, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of shares of Common Stock issuable upon such exercise. In the event
that this Warrant is exercised in part, the Company shall execute and deliver a
new Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
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4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional shares to which the Holder would otherwise
be entitled, the Company shall make a cash payment equal to the then exercise
price multiplied by such fraction.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of loss, theft, or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company, or in the case of mutilation, on surrender and cancellation of the
remainder of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor and amount.
6. NO RIGHTS AS STOCKHOLDER. Nothing contained herein shall be
construed as conferring upon the Holder or any other person the right to vote
or to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matter
or any right as a stockholder of the Company, and no dividends shall be payable
or accrued in respect of this Warrant or the interest represented hereby or the
shares of Common Stock obtainable hereunder until, and only to the extent that,
this Warrant shall have been exercised as set forth herein.
7. TRANSFERS OF THE WARRANT.
7.1 Company Records. The Holder may change its address
as shown on the Company records by written notice to the Company requesting
such change. Any notice or written communication required or permitted to be
given to the Holder may be delivered or given by mail to the Holder at the
address shown on the Company records. Until this Warrant is transferred on the
Company records, the Company may treat the Holder as shown on the Company
records as the absolute owner of this Warrant for all purposes, notwithstanding
any notice to the contrary.
7.2 Warrant Agent. The Company may, by written notice to
the Holder, appoint an agent for the purpose of maintaining the Company records
referred to in Section 7.1 hereof, issuing the Common Stock or other securities
then issuable upon the exercise of this Warrant, exchanging or replacing this
Warrant, or any or all of the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be, shall be made at the
office of such agent.
7.3 Transfer of Warrant. The Holder may not transfer or
assign this Warrant in whole or in part without compliance with all applicable
federal and state securities laws and the rules and regulations thereunder (the
"Securities Laws") by the Holder and the transferee (including the delivery of
investment representation letters and legal opinions reasonably satisfactory to
the Company, if such are requested by the Company). In addition, this Warrant
may not be sold, transferred, assigned, pledged or hypothecated for a period of
twelve (12) months from the date hereof, except (i) to officers or partners of
Sutro & Co. Incorporated, (ii) to other members of the
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underwriting or selling group for the Company's initial public offering to
which this Warrant relates, (iii) to the officers or partners of such other
members, or (iv) otherwise without compliance with the Corporate Financing Rule
of the National Association of Securities Dealers, Inc. Subject to the
foregoing, title to this Warrant may be transferred by endorsement (by the
Holder executing the Assignment Form annexed hereto) and delivery in the same
manner as a negotiable instrument transferable by endorsement and delivery.
7.4 Exchange of Warrant Upon a Transfer. On surrender of
this Warrant, properly endorsed on the Assignment Form, for exchange, and
subject to compliance with the Securities Laws and the limitations on
assignment and transfer contained in this Section 7, the Company at its expense
shall issue to or to the order of the Holder a new warrant or warrants of like
tenor, in the name of the Holder or as the Holder may direct for the number of
shares issuable upon exercise hereof.
8. COMPLIANCE WITH SECURITIES LAWS
8.1 The Holder of this Warrant, by acceptance hereof,
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired solely for the Holder's own account and not as a nominee for
any other party, and for investment, and that the Holder will not offer, sell
or otherwise dispose of any shares of Common Stock to be issued upon exercise
hereof, except under circumstances that will not result in a violation of the
Securities Laws. Upon exercise of this Warrant, the Holder shall, if requested
by the Company, and subject to the applicability of the Registration Rights
Agreement between the Company and the Holder of even date herewith (the
"Registration Rights Agreement"), confirm in writing, in a form satisfactory to
the Company, that the shares of Common Stock so purchased are being acquired
solely for the Holder's own account and not as a nominee for any other party,
for investment, and not with a view toward distribution or resale.
8.2 Legend. Subject to the applicability of the
Registration Rights Agreement, all shares of Common Stock issued upon exercise
hereof may be stamped or imprinted with a legend in substantially the following
form (in addition to any legend required by state securities laws):
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
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9. RESERVATION OF COMMON STOCK. The Company covenants that
during the term that this Warrant is exercisable, the Company will reserve from
its authorized and unissued shares of Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the exercise of this
Warrant, and from time to time will take all steps necessary to provide
sufficient reserves of shares of Common Stock issuable upon exercise of the
Warrant, including, if necessary, amending its Articles of Incorporation. The
Company further covenants that all shares that may be issued upon the exercise
of rights represented by this Warrant, upon exercise of the rights represented
by this Warrant and payment of the exercise price, all as set forth herein,
will be free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously or
otherwise specified herein). The Company agrees that its issuance of this
Warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant.
10. INFORMATION. During the term of this Warrant, the Company
shall provide the Holder with the same financial information, annual reports,
notices of stockholder meetings, and other information as and to the same
extent that the Company provides the same to its stockholders from time to
time.
11. GENERAL PROVISIONS.
11.1 Amendment. Any amendment or modification of this
Warrant shall be in writing and shall be signed by all of the parties hereto.
11.2 Waiver. Any waiver of any right, power, or privilege
hereunder must be in writing and signed by the party being charged with the
waiver. No delay on the part of any party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver of any other right,
power, or privilege hereunder, nor shall any single or partial exercise of any
right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
11.3 Notices. All notices or other communications
required or permitted to be given pursuant to this Warrant shall be in writing
and shall be delivered personally or sent by overnight courier or by
first-class United States mail. Notices delivered personally or sent by
overnight courier shall be effective on the date received, while notices sent
by first-class mail shall be deemed to have been received and to be effective
three (3) business days after deposit into the United States mails. Notices
shall be given to the parties at the following respective addresses, or to such
other addresses as any party shall designate in writing:
If to the Company: International Aircraft Investors
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
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If to the Holder: Sutro & Co. Incorporated
00000 Xxxxx Xxxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Managing Director
11.4 Law Governing. This Warrant has been negotiated,
executed, and delivered and shall be performed in the State of California and
shall be governed by and construed and enforced in accordance with the laws of
the State of California, without regard for its conflict of laws principles.
11.5 Counterparts. This Warrant may be executed in two or
more counterparts, including by facsimile transmission, all of which together
shall constitute a single instrument.
11.6 Construction. The headings in the Sections of this
Warrant are for convenience only and shall not constitute a part hereof.
Whenever the context so requires, the masculine shall include the feminine and
the neuter, the singular shall include the plural, and conversely. The terms
and all parts of this Warrant shall in all cases be interpreted simply and
according to their plain meaning and neither for nor against any party hereto.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Warrant as of this ____ day of __________, 1997.
International Aircraft Investors Sutro & Co. Incorporated
By: ____________________________ By:__________________________
Name: __________________________ Name:________________________
Its: ___________________________ Its:_________________________
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NOTICE OF EXERCISE
To: International Aircraft Investors
1. The undersigned hereby elects to purchase ___________________
shares of the common stock (the "Common Stock") of International Aircraft
Investors pursuant to the terms of the attached Common Stock Purchase Warrant
(the "Warrant"), and tenders herewith payment of the purchase price for such
shares in full.
2. In exercising this Warrant, the undersigned hereby confirms
and acknowledges that the shares of Common Stock being purchased hereby are
being acquired solely for the account of the undersigned and not as a nominee
for any other party, for investment purposes only, and that the undersigned
will not offer, sell, or otherwise dispose of any such shares of Common Stock
except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any applicable state securities laws.
3. Please issue a certificate or certificates representing such
shares of Common Stock in the name of the undersigned or in such other name as
specified below:
______________________________________
4. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
______________________________________
Date: _________________________ Sutro & Co. Incorporated
By: __________________________________
Name: (Print) ________________________
Its: _________________________________
42
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of the attached
Common Stock Purchase Warrant (the "Warrant") hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned
under the Warrant with respect to the number of shares of the common stock (the
"Common Stock") of International Aircraft Investors (the "Company") set forth
below:
Name of Assignee Address Number of Shares
and does hereby irrevocably constitute and appoint ___________________________,
attorney-in-fact, to make such transfer on the books and records of the Company
maintained for this purpose, with full power of substitution and
resubstitution.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of Common Stock issuable
on exercise hereof are being acquired for investment and not with a view toward
distribution or resale, and that the Assignee will not offer, sell, or
otherwise dispose of this Warrant or any shares of Common Stock issuable on
exercise hereof except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any applicable state securities
laws. Further, in compliance with Section 7.3 of the Warrant, the Assignee
shall, if requested by the Company, confirm in writing in a form satisfactory
to the Company that this Warrant or any shares of Common Stock issuable on
exercise hereof are being acquired for investment and not with a view toward
distribution or resale.
Date: __________________________ ___________________________________
___________________________________
___________________________________
43
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
44
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of _________, 1997, by and among International Aircraft
Investors, a California corporation (the "Company") and Sutro & Co.
Incorporated, a Delaware corporation.
RECITAL
The Company is issuing to the Holder (as defined below) that certain
Common Stock Purchase Warrant (the "Warrant"), of even date herewith, granting
to the Holder the right to purchase up to _______ Shares of the Company's
Common Stock, subject to adjustment, for $_______ per share. The Company
desires to grant certain demand and incidental registration rights to the
Holder in connection with the shares purchasable on exercise of the Warrant.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are here-by acknowledged, the parties hereby
agree as follows:
AGREEMENT
1. DEFINITIONS. Unless the context requires otherwise, the
following underlined terms shall have the following respective meanings:
1.1 Agreement. This Registration Rights Agreement.
1.2 Common Stock. The Company's common stock, par value
$0.01 per share.
1.3 Company. International Aircraft Investors, a
California corporation.
1.4 Exchange Act. The Securities Exchange Act of 1934,
as amended.
1.5 Holder or Holders. Sutro & Co. Incorporated and its
permitted assigns.
1.6 Registrable Securities. The shares of Common Stock
issued upon exercise of the Warrant.
1.7 Registration Expenses. All expenses of registration,
including but not limited to registration and filing fees, including filing
fees for Nasdaq and all stock exchanges on which the Common Stock is traded,
fees and expenses of complying with the Securities Laws, printing expenses,
transfer agent fees, and the fees and expenses of the Company's independent
certified
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public accountants, the Company's investment banker and underwriter and the
Company's legal counsel, but excluding the Holder's brokerage fees,
underwriting fees and discounts, transfer taxes, if any, and the fees and
expenses of any Selling Shareholder's legal counsel.
1.8 SEC. The United States Securities and Exchange
Commission.
1.9 Securities. The Warrant and the shares of Common
Stock issuable on exercise thereof of the Warrant.
1.10 Securities Act. The Securities Act of 1933, as
amended.
1.11 Securities Laws. The Securities Act, the Exchange
Act and all applicable state securities laws, and all rules and regulations
promulgated thereunder.
1.12 Selling Shareholder. With respect to any
registration statement, any Holder whose Registrable Securities are included
therein.
1.13 Sutro. Sutro & Co. Incorporated or its successors.
1.14 Warrant. The Company's Common Stock Purchase Warrant
dated ___________, 1997, issued to the Holder and exercisable to purchase up to
[ ] shares of Common Stock at $_______ per share.
2. REGISTRATION RIGHTS.
2.1 Incidental Registration Rights.
(a) Notice of Registration; Registration.
Whenever the Company proposes to file a registration statement under the
Securities Act to offer publicly shares of the Common Stock (other than in
connection with any merger, acquisition, exchange offer, dividend reinvestment
plan, employee benefit plan, or stock option plan), the Company shall give each
Holder written notice of such intention at least twenty (20) days prior to the
anticipated initial filing date of such registration statement. The Company
shall include in such registration statement all Registrable Securities
requested to be so included by a Holder upon written notice to the Company
within ten (10) days of the Company's notice. If the registration statement is
for an underwritten offering, the Selling Shareholder shall sell its
Registrable Securities in such offering on the same terms and conditions as all
other shares of Common Stock being offered in such registration statement.
(b) Holdback. If the notice of registration
under this Section 2.1 is for an underwritten public offering and the Company
is advised in writing by the managing underwriter of such offering that in its
reasonable judgment the number of Registrable Securities for which incidental
registration is requested pursuant to this Agreement cannot be sold without
impairing the ability to complete the preestablished plan for distribution of
the Common Stock (the grounds for
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which shall be confidentially disclosed to any Selling Shareholder who so
requests and who agrees to maintain the confidentiality of such disclosure)
then the number of Registrable Securities to be sold by the Selling Shareholder
shall be reduced. The Company shall so advise all Holders proposing to
distribute their securities through such underwriting and the number of shares
of securities that may be included in the registration and underwriting (other
than on behalf of the Company) shall be allocated among all Holders and such
other holders, if any, with contractual rights to participate in such
registration which are not subordinate to the Holders, in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities or other
securities requested to be included in such registration by such Holders and
such other holders. If the number of Registrable Securities of the Selling
Shareholder is reduced, the Selling Shareholder may withdraw all or part of the
Registrable Securities from registration without affecting such Selling
Shareholder's registration rights hereunder for the Registrable Securities so
withdrawn or reduced.
(c) Underwriting Agreement. As a condition for
the inclusion of any Registrable Securities in any registration statement, at
the request of the Company, the Selling Shareholder shall enter into an
underwriting agreement with the Company and the underwriter(s) with respect to
the registration of its Registrable Securities, in such customary form that is
reasonably acceptable to the Company, the Selling Shareholder and such
underwriter(s), consistent with the provisions of this Agreement.
(d) Withdrawal by the Company. The Company shall
retain the absolute right to withdraw any registration statement prior to the
effective date thereof, even if the Company shall have given notice to the
Holder pursuant to Section 2.1(a) hereof and the Selling Shareholder has
requested inclusion of its Registrable Securities therein.
(e) Expenses. The Company shall pay all
Registration Expenses for registrations under this Section 2.1. The Selling
Shareholder shall pay all brokerage fees, underwriting fees and discounts,
transfer taxes, if any, and the fees and expenses of the Selling Shareholder's
legal counsel in connection with the registration and sale of its Registrable
Securities.
(f) Term. The incidental registration rights
granted pursuant to this Section 2.1 shall terminate on the earliest of the
sale of all Registrable Securities by the Holder or the receipt by the Holder
of the written opinion of legal counsel for the Company that all of the
Registrable Securities may be publicly sold without the need for compliance
with the registration provisions of the Securities Laws.
2.2 Demand Registration.
(a) Notice of Demand. If, any time after ______,
1998, the Company shall receive a written notice from a Holder demanding
that the Company register its Registrable Securities, then the Company shall
promptly give written notice of such demand to all other Holders of Registrable
Securities, if any, and will, subject to the other provisions of this
Agreement, include in a registration statement all Registrable Securities
requested to be so included by Holders upon
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written notice to the Company within twenty (20) days after the date of the
notice by the Company to the Holders, as long as the total of all Registrable
Securities for which registration is demanded represents a majority of the
outstanding Registrable Securities. The Holders as a group shall be entitled
to one (1) demand registration under this Section 2.2.
(b) Registration. Promptly after receipt of a
demand for registration as set forth in Section 2.2(a) hereof, the Company
shall prepare and file with the SEC a registration statement, on the applicable
form deemed appropriate by the Company, for all the Registrable Securities for
which registration is demanded, and the Company shall use reasonable efforts to
cause such registration statement to become effective as soon as practicable
and any necessary or appropriate qualification or compliance (including,
without limitation, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Laws and any other governmental
requirements or regulations). Notwithstanding the foregoing, the Company shall
have the right to delay the filing of the registration statement once for up to
one hundred twenty (120) days if the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be materially detrimental to
the Company or its shareholders for a registration statement to be filed or
become effective during such period.
(c) Expenses. The Company shall pay all
Registration Expenses for registrations under this Section 2.2. The Selling
Shareholder shall pay all brokerage fees, underwriting fees and discounts,
transfer taxes, if any, and the fees and expenses of the Selling Shareholder's
legal counsel in connection with the registration and sale of its Registrable
Securities.
(d) Term. The demand registration rights granted
pursuant to this Section 2.2 shall terminate on the earliest of the sale of all
Registrable Securities by the Holder or the receipt by the Holder of the
written opinion of legal counsel for the Company that the Registrable
Securities may be publicly sold without the need for compliance with the
registration provisions of the Securities Laws.
(e) Underwriting by Sutro. If a registration
under this Section 2.2 is requested by one or more Selling Shareholders to be
in the form of an underwritten offering, then the Company and the Selling
Shareholder(s) shall retain and cooperate with Sutro as the managing
underwriter of such offering, subject to the execution of an underwriting
agreement in such customary form that is reasonably acceptable to the Company,
the Selling Shareholder(s) and Sutro and consistent with the provisions of this
Agreement; provided that Sutro maintains, at the time of such offering, all
federal and state governmental and other licenses and permits necessary to act
as an underwriter of securities.
2.3 Registration Procedures.
(a) Selling Shareholder Information. Each
Selling Shareholder shall provide the Company with such information about the
Selling Shareholder and its intended manner
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of distribution of the Registrable Securities, and shall otherwise cooperate
with the Company and the underwriters, if any, as may be needed or helpful to
complete any obligation of the Company hereunder.
(b) Consultation. The Company shall supply
drafts of any registration statement to the Selling Shareholder prior to filing
the registration statement with the SEC, and shall reasonably consult with the
Selling Shareholder and its legal counsel with respect to the form and content
of such filing. The Company will amend such registration statement to include
such revisions as the Selling Shareholder or its legal counsel shall reasonably
request. If material revisions reasonably requested by the Selling Shareholder
or its legal counsel are not effected by the Company, the Selling Shareholder
may withdraw all or part of the Registrable Securities from registration
without affecting such Selling Shareholder's registration rights hereunder for
the Registrable Securities so withdrawn or reduced.
(c) Provision for Prospectuses. The Company
shall furnish the Selling Shareholder with the number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus in
conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable Securities.
(d) State Securities Law Compliance. The Company
shall use reasonable efforts to register or qualify the Registrable Securities
covered by the registration statement under the Securities Laws of such states
as the Selling Shareholder may reasonably request in light of the costs of such
registration or qualification for the Company (provided, however, that the
Company shall not be required to consent to the general service of process for
all purposes in any jurisdiction where it is not then qualified to do business
or to qualify to do business) and do any and all other acts or things that may
be reasonably necessary or advisable to enable the Selling Shareholder to
consummate the public sale or other disposition of their Registrable Securities
in such states.
(e) Amendments. In the case of a demand
registration pursuant to Section 2.2, the Company shall use reasonable efforts
to prepare and file promptly with the SEC such amendments and supplements to
the registration statement filed with the SEC in connection with such
registration and the prospectus used in connection therewith as may be
necessary to keep such registration statement continuously effective and in
compliance with the Securities Act for up to six (6) months, or until all
Registrable Securities registered in such registration statement have been
sold, whichever is earlier.
(f) Prospectus Delivery. At any time when a sale
or other public disposition of Common Stock pursuant to a registration
statement is subject to a prospectus delivery requirement, the Company shall
immediately notify the Selling Shareholder of the occurrence of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
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49
existing. Upon receipt of such a notice, the Selling Shareholder shall
immediately discontinue sales or other dispositions of Registrable Securities
pursuant to such registration statement. The Selling Shareholder may resume
sales only upon receipt of an amended prospectus or after the Selling
Shareholder has been advised by the Company that use of the previous prospectus
may be legally resumed.
(g) Opinions. At the request of the Selling
Shareholder, the Company shall use reasonable efforts to furnish on the date
that the Registrable Securities are delivered to the underwriter for sale in
connection with an underwritten offering registration pursuant to this
Agreement (i) a letter from the legal counsel representing the Company for the
purposes of such registration giving the Selling Shareholder the right to rely
upon the opinion of such legal counsel delivered to the underwriter(s) acting
on behalf of the Company in connection with such registration insofar as such
opinion relates to the Selling Shareholder, and (ii) a letter from the
independent certified public accountants of the Company substantially the same
as the letter of such accountants delivered to the underwriter(s) acting on
behalf of the Company in connection with such registration, provided that the
Selling Shareholder provides to such accountants the opinion or representation
letter required by Statement of Auditing Standards No. 72.
(h) Stop Orders. The Company shall immediately
notify the Selling Shareholder of the issuance by the SEC of any stop order or
order suspending the effectiveness of any registration statement, the issuance
by any state regulatory authority of any order suspending the registration or
qualification of the Registrable Securities for sale in such jurisdiction, or
the initiation of any proceeding for such purposes. The Company, with the
reasonable cooperation of the Selling Shareholder, shall make every reasonable
effort to contest any such proceeding or to obtain the withdrawal of any such
order at the earliest possible date.
(i) Review of Records. The Company shall make
available all financial and other records, pertinent corporate documents, and
properties of the Company for inspection by the Selling Shareholder or its
underwriter, legal counsel, or accountants, and shall cause the Company's
officers, directors, and employees to supply all information reasonably
requested by any such person in connection with any registration statement
filed or to be filed hereunder, so long as such person agrees to keep
confidential any records, information, or documents designated by the Company
in writing as confidential.
(j) Compliance with Securities Laws. In all
actions taken under this Agreement, the Company and the Selling Shareholder
shall use their best efforts to comply with all provisions of the Securities
Laws.
(k) Market Stand-Off. If requested by the
Company, the Holder may not sell or otherwise transfer any Registrable
Securities held by the Holder, other than those Registrable Securities included
in a registration statement, during the one hundred eighty (180) day period
following the effective date of a registration statement filed by the Company
under the Securities Act with respect to any underwritten offering. The
Company may impose stop-transfer instructions
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with respect to the Registrable Securities subject to the foregoing
restrictions until the end of such one hundred eighty day period.
2.5 Sales under Rule 144. With the view to making the
benefits of Rule 144 under the Securities Act available to the Holder, the
Company shall use reasonable efforts to (a) ensure that there is adequate
current public information (as set forth in Rule 144(c)) available with respect
to the Company; (b) timely file with the SEC all reports and other documents
required to be filed by the Company under the Securities Act, the Exchange Act,
and the rules and regulations promulgated thereunder; and (c) promptly furnish
to the Holder upon request a written statement by the Company as to the
Company's compliance with these covenants and the provisions of Rule 144.
2.6 Indemnification.
(a) The Company's Indemnification. The Company
shall indemnify, defend, save, and hold the Selling Shareholder (and any person
who controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), with respect to which a
registration or qualification has been effected pursuant to this Agreement,
harmless from and against any and all liabilities, claims, damages, demands,
expenses, and losses, including but not limited to interest, penalties, court
costs, attorneys' fees, and settlements approved by the Company, which consent
shall not be unreasonably withheld, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement or prospectus, or any amendment or supplement thereto,
incident to any such registration or qualification, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act applicable to the Company in connection with any
such registration or qualification, and the Company will reimburse each such
Holder, each of its officers and directors, and each person controlling such
Holder for any legal and any other expenses reasonably incurred in connection
with investigating, preparing or defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable to any such
person in any case to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission (or
alleged untrue statement or omission), made in reliance upon and in conformity
with written information furnished to the Company by such Holder or controlling
person and stated to be specifically for use therein or the preparation
thereby.
(b) The Selling Shareholder's Indemnification.
Each Selling Shareholder with Registrable Securities included in a registration
statement under this Agreement shall indemnify, defend, save, and hold (i) the
Company and its directors, officers, and controlling persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
(ii) the underwriter(s), if any, and their controlling persons, and (iii) all
other selling shareholders participating in such offering (and their respective
officers, directors, underwriters, and controlling persons) harmless from and
against any and all liabilities, claims, damages, demand, expenses, and losses,
including but not limited to interest, penalties, court costs, attorneys' fees,
and settlements
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approved by the Selling Shareholder, which consent shall not be unreasonably
withheld, arising out of (i) any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement or a related
prospectus, or any amendment or supplement thereto, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) or any violation
by such Selling Shareholder of the Securities Act in connection with such
registration or qualification, and will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, in the case of clause (i) above to the extent, but only to the
extent that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement or in a related
prospectus in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein or the preparation thereby. Notwithstanding the foregoing, the
liability of each Holder under this subsection (b) shall be limited to the
gross proceeds from the offering received by such Holder.
(c) Contribution. If the indemnification
provided for in this Section 2.6 from an indemnifying party is unavailable to
an indemnified party hereunder in respect to any liability, claim, damage,
demand, expense, or loss referred to herein, then the indemnifying party in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such liability, claim,
damage, demand, expense, or loss in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party
in connection with the statements or omissions that resulted in such liability,
claim, damage, demand, expense, or loss, as well as any other relevant
equitable consideration. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by a party as a result of the
liabilities, claims, damages, demands, expenses, and losses referred to above
shall be deemed to include any court costs, attorneys' fees, and other expenses
reasonably incurred by such party in connection with investigating or defending
any action, suit, or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 2.6(c) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in this
Section 2.6(c). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not also guilty of such fraudulent
misrepresentation.
3. GENERAL PROVISIONS.
3.1 Amendment. All amendments or modifications of this
Agreement shall be in writing and shall be signed by all of the parties hereto.
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3.2 Waiver. Any waiver of any right, power, or privilege
hereunder must be in writing and signed by the party being charged with the
waiver. No delay on the part of any party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver of any other right,
power, or privilege hereunder, nor shall any single or partial exercise of any
right power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
3.3 Notices. All notices or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and shall be delivered personally or sent by overnight courier, by
telecopy with confirmation by first-class mail, or by certified mail, return
receipt requested. Notices delivered personally or sent by overnight courier
or by telecopy with confirmation by first-class mail shall be effective on the
date first received, while notices sent by certified mail, return receipt
requested, shall be deemed to have been received and to be effective three (3)
business days after deposit into the mails. Notices shall be given to the
parties at the following respective addresses, or to such other addresses as
any party shall designate in writing:
If to the Company: International Aircraft Investors
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
If to the Holder: Sutro & Co. Incorporated
00000 Xxxxx Xxxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
c/o Xxxxx X. Xxxxxxxx, Managing Director
3.4 Successors and Assigns This Agreement and each of
its provisions shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, administrators
successors, and assigns. The Holder may assign this Agreement and its rights
hereunder only in connection with a transfer or assignment of all or part of
the Warrant or the Registrable Securities.
3.5 Law Governing. This Agreement has been negotiated,
executed and delivered and shall be performed in the State of California and
shall be governed by and construed and enforced in accordance with the laws of
the State of California, without regard for its conflict of laws rules.
3.6 Attorneys' Fee. In any suit to interpret or enforce
the terms and provisions of this Agreement, the prevailing party shall be
entitled to recover court costs and attorneys' fees, in addition to any other
remedy or recovery to which such party may be entitled.
3.7 Counterparts. This Agreement may be executed in two
or more counterparts, including by facsimile transmission, all of which
together shall constitute a single instrument.
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3.8 Severability of Provisions. In the event any one or
more of the provisions of this Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
3.9 Construction. The headings in the sections and
paragraphs of this Agreement are for convenience only and shall not constitute
a part hereof. Whenever the context so requires, the masculine shall include
the feminine and the neuter, the singular shall include the plural, and
conversely. The terms and all parts of this Agreement shall in all cases be
interpreted simply and according to their plain meaning and neither for nor
against any party hereto.
IN WITNESS WHEREOF, the parties have duty executed and
delivered this Agreement as of the date first written above.
International Aircraft Investors Sutro & Co. Incorporated
By: _______________________________ By: _____________________________
Xxxxxxx X. Xxxxxxx
Chief Executive Office Name (Printed): _________________
Title: __________________________
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