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EXHIBIT 1.1
LLG&M DRAFT 3/ /98
UNDERWRITING AGREEMENT
March ___, 1998
CRUTTENDEN XXXX INCORPORATED
As Representative of the several Underwriters
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Re: American Aircarriers Support, Incorporated
Ladies and Gentlemen:
American Aircarriers Support, Incorporated, a Delaware corporation
(the "Company"), addresses you as the Representative of each of the persons,
firms and corporations listed on Schedule "A" attached hereto (herein
collectively called the "Underwriters") and hereby confirms its agreement with
the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
two million (2,000,000) shares of its authorized and unissued Common Stock,
$0.001 par value per share (the "Firm Shares"), to the several Underwriters.
The Company also proposes to grant to the Underwriters an option to purchase up
to three hundred thousand (300,000) additional shares of the Company's Common
Stock, $0.001 par value per share (the "Option Shares"), as provided in Section
7 hereof. In addition, the Company proposes to sell to you, individually and
not in your capacity as Representative, five (5) year warrants exercisable
commencing one (1) year from the effective date of the Company's Registration
Statement (as hereinafter defined) (the "Representative's Warrants") to
purchase up to two hundred thousand (200,000) shares of Common Stock, $0.001
par value per share, of the Company (the "Representative's Warrant Stock"),
which sale will be consummated in accordance with the terms and conditions of
the Representative's Warrant Agreement (the "Representative's Warrant
Agreement"), the form of which is filed as an exhibit to the Registration
Statement. As used in this Underwriting Agreement (the "Agreement"), the term
"Shares" shall include the Firm Shares and the Option Shares. All shares of
Common Stock, $0.001 par value per share, of the Company to be outstanding
after giving effect to the sales contemplated hereby, including the sale of the
Shares, are hereinafter referred to as the "Common Stock". Unless the context
otherwise requires, references herein to the "Company" include American
Aircarriers Support, Incorporated, a Delaware corporation, together with its
subsidiaries described in the Prospectus, if any, and includes American
Aircarriers Support, Incorporated, a South Carolina corporation, the
predecessor thereto.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company represents and warrants to and agrees with each
Underwriter that:
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(a) The Registration Statement on Form SB-2 (File No.
333-_______) with respect to the Shares, the Representative's Warrants and the
Representative's Warrant Stock, including a prospectus subject to completion,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the applicable rules
and regulations (the "Rules and Regulations") of the United States Securities
and Exchange Commission (the "Commission") under the 1933 Act and have been
filed with the Commission; such amendments to the Registration Statement and
such amended prospectuses subject to completion as may have been required prior
to the date hereof have been similarly prepared and filed with the Commission;
and the Company will file such additional amendments to the Registration
Statement and such amended prospectuses subject to completion as may hereafter
be required. Copies of the Registration Statement and all amendments and of
each related prospectus subject to completion (collectively, the "Preliminary
Prospectuses") have been delivered to you.
If the Registration Statement relating to the Shares
has been declared effective under the 1933 Act by the Commission, the Company
will prepare and promptly file with the Commission the information previously
omitted from the Registration Statement, as applicable, pursuant to Rule
430A(a) of the Rules and Regulations pursuant to subparagraph (1) or (4) of
Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to the Registration Statement (including a final form of prospectus).
If the Registration Statement relating to the Shares has not been declared
effective under the 1933 Act by the Commission, the Company will prepare and
promptly file amendments to the Registration Statement, including a final form
of prospectus, as applicable. The term "Registration Statement" as used in
this Agreement shall mean such registration statement, including financial
statements (and the notes thereto), and all schedules and exhibits thereto, in
the form in which it became or becomes, as the case may be, effective
(including, if the Company omitted information from the registration statement
pursuant to Rule 430A(a) of the Rules and Regulations, the information deemed
to be a part of the registration statement at the time it became effective
pursuant to Rule 430A(b) of the Rules and Regulations) and, in the event of any
amendment thereto after the effective date of such registration statement,
shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended. The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the Shares as included in the
Registration Statement at the time it becomes effective (including, if the
Company omitted information from the Registration Statement pursuant to Rule
430A(a) of the Rules and Regulations, the information deemed to be a part of
the Registration Statement at the time it became effective pursuant to Rule
430A(b) of the Rules and Regulations), except that if any revised prospectus
shall be provided to the Underwriters by the Company for use in connection with
the offering of the Shares that differs from the prospectus on file with the
Commission at the time the Registration Statement became or becomes, as the
case may be, effective (whether or not such revised prospectus is required to
be filed with the Commission pursuant to Rule 424(b)(3) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Underwriters for such use.
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(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus, at the time of the filing
thereof, has conformed in all material respects to the requirements of the 1933
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 light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date (as hereinafter defined) and
on any later date on which Option Shares are to be purchased, (i) the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the 1933 Act and the Rules and Regulations and will in all
material respects conform to the requirements of the 1933 Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and 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 (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or the Prospectus, or
any amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to any Underwriter furnished to the Company by
such Underwriter specifically for use in the preparation thereof.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation with full power and authority (corporate and otherwise) to
own, lease and operate its properties and conduct its business as described in
the Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company taken as a whole; 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; the Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from all state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect; the Company is not in material
violation of its Certificate of Incorporation or Bylaws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness, or in any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or partnership agreement, or any other agreement
or instrument to which the Company is a party or by which it or its properties
or assets may be bound; and the Company is not in material violation of any
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known law, order, rule, regulation, writ, injunction, judgment or decree of any
court, government, or regulatory or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or over its properties, assets or
operations. The Prospectus accurately describes any corporation, company,
partnership, association or other entity owned or controlled, directly or
indirectly, by the Company.
(d) The Company has full legal right, power and authority
to enter into this Agreement and the Representative's Warrant Agreement and to
perform the transactions contemplated hereby and thereby. Each of this
Agreement and the Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement on
the part of the Company, enforceable in accordance with its terms, except as
rights to indemnification under this Agreement or the Representative's Warrant
Agreement may be limited by applicable law and except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws or rules relating to or affecting creditors'
rights generally or by general equitable principles; the performance of this
Agreement and the Representative's Warrant Agreement and the consummation of
the transactions herein or therein contemplated will not result in a material
breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any bond, debenture, note or other evidence of indebtedness,
or under any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or partnership agreement, or other agreement or
instrument to which the Company is a party or by which it or its properties or
assets may be bound, (ii) the Certificate of Incorporation or Bylaws of the
Company, or (iii) any law, order, rule, regulation, writ, injunction, judgment
or decree of any court, government, or regulatory or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or its
properties, assets or operations. No consent, approval, authorization or order
of or qualification with any court, government, or regulatory or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or
its properties, assets or operations is required for the execution and delivery
of this Agreement or the Representative's Warrant Agreement and the
consummation by the Company of the transactions herein and therein
contemplated, except such as may be required under the 1933 Act or the Rules
and Regulations, or under state or other securities or "blue sky" laws, rules
or regulations, all of which requirements have been satisfied in all material
respects.
(e) There is not any pending or, to the best of the
Company's knowledge, threatened action, suit, claim or proceeding against the
Company, or any of its officers or any of its properties, assets or rights
before any court, government, or regulatory or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or its officers,
properties or assets or otherwise that (i) is reasonably likely to result in
any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company or that
might materially and adversely affect its officers, properties, assets or
rights, (ii) might prevent consummation of the transactions contemplated
hereby, or (iii) is required to be disclosed in the Registration Statement or
the Prospectus and is not so disclosed; and there are no agreements, contracts,
leases or documents of the Company of a character required to be described or
referred to in the Registration Statement or the Prospectus or to be filed as
an exhibit
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to the Registration Statement by the 1933 Act or the Rules and Regulations or
by the Securities Exchange Act of 1934, as amended (the "1934 Act"), or the
rules and regulations of the Commission thereunder that have not been
accurately described in all material respects in the Registration Statement or
the Prospectus or filed as exhibits to the Registration Statement.
(f) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, rules and regulations, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and the authorized and outstanding capital stock of the Company is
as set forth in the Prospectus under the caption "Capitalization" and conforms
in all material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the documents and instruments defining the capitalization of
the Company); the Firm Shares and the Option Shares have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company against payment therefor in accordance with
the terms of this Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest; and no preemptive right,
co-sale right, registration right, right of first refusal or other similar
right exists with respect to any of the Firm Shares or Option Shares or the
issuance and sale thereof other than those that will automatically expire upon
the consummation of the transactions contemplated on the Closing Date. No
further approval or authorization of any stockholder, the Board of Directors of
the Company or others is required for the issuance and the sale or transfer of
the Shares except as may be required under the 1933 Act, the Rules and
Regulations, or under state or other securities or "blue sky" laws, rules or
regulations. Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company (and the notes thereto) included in the
Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or purchase, any securities
or obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock 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 under the 1933 Act and the Rules and
Regulations.
(g) Cherry, Bekaert & Holland, L.L.P., which has examined
the financial statements of the Company, together with the related schedules
and notes thereto, as of December 31, 1996 and 1997 filed with the Commission
as a part of the Registration Statement, which are included in the Prospectus,
are independent accountants within the meaning of the 1933 Act and the Rules
and Regulations; the audited financial statements of the Company, together with
the related schedules and notes thereto, and the unaudited financial
information, forming part of the Registration Statement and the Prospectus,
fairly present the financial position and results of operations of the Company
at the respective dates and for the respective periods to which they apply; and
all audited financial statements of the Company, together with the related
schedules and
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notes thereto, and the unaudited financial information, filed with the
Commission as part of the Registration Statement, have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as may be otherwise stated therein.
The selected and summary financial and statistical data included in the
Registration Statement presents fairly the information shown therein and have
been compiled on a basis consistent with the audited financial statements
presented therein. No other financial statements or schedules or notes are
required to be included in the Registration Statement.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
has not been (i) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company, (ii) any transaction that is material to the Company outside the
ordinary course of business, (iii) any material obligation, direct or
contingent, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any material change in the capital stock or
outstanding indebtedness of the Company, (v) any dividend or distribution of
any kind or nature declared, paid or made on the capital stock of the Company
(other than the distributions made to the Existing Common Stockholders (as that
term is defined in the Prospectus), as disclosed under "S Corporation
Distributions" therein), or (vi) any loss or damage (whether or not insured) to
the property or assets of the Company that has had or may have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(i) Except as set forth in the Registration Statement and
the Prospectus, (i) the Company has good and marketable title to all properties
and assets described in the Registration Statement and the Prospectus as being
owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than such as would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company, and (ii) the
agreements to which the Company is a party described in the Registration
Statement and the Prospectus are valid agreements, enforceable by the Company,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and,
to the best of the Company's knowledge, the other contracting party or parties
thereto are not in material breach or material default under any of such
agreements. Except as set forth in the Registration Statement and the
Prospectus, the Company owns or leases all such properties as are necessary to
its operations as now conducted and as described in the Registration Statement
and the Prospectus.
(j) The Company has timely filed all federal, state,
local and foreign tax returns required to be filed by it and has paid all taxes
shown thereon as being due, and there is no tax deficiency that has been or, to
the best of the Company's knowledge, is reasonably likely to be asserted
against the Company or any of its properties or assets that might have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business
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prospects of the Company, and all tax liabilities are adequately provided for
on the books of the Company.
(k) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for its business, including, but not limited to, (i) insurance
covering real and personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, and (ii) product liability insurance concerning the products
sold and leased by the Company and the services provided by the Company in
connection therewith, all of which insurance is in full force and effect; the
Company has not been refused any insurance coverage sought or applied for; and
the Company does not have any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business, at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company.
(l) To the best of Company's knowledge, no labor
disturbance by the employees of the Company exists or is imminent. No
collective bargaining agreement exists with any of the Company's employees and,
to the best of the Company's knowledge, no such agreement is imminent.
(m) The Company owns or possesses adequate rights to use
all trade secrets, know-how, trademarks, service marks and trade names that are
necessary to conduct its businesses as described in the Registration Statement
and the Prospectus; the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any trade secrets, know-how, trademarks,
service marks or trade names; and the Company has not received any notice of,
and has no knowledge of, any infringement of or conflict with asserted rights
of others with respect to any trade secrets, know-how, trademarks, service
marks or trade names that, singly or in the aggregate, in the event of an
unfavorable decision, ruling or finding, would have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company.
(n) The Common Stock is registered pursuant to Section
12(g) of the 1934 Act and is approved for quotation on the Nasdaq National
Market, and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the 1934 Act
or delisting the Common Stock from the Nasdaq National Market, nor has the
Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
(o) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its business and affairs in such a manner as
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to ensure that it will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the 1940 Act and
such rules and regulations.
(p) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on which
Option Shares are to be purchased, as the case may be, and (ii) the completion
of the distribution of the Shares, any offering material in connection with the
offer and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted
by the 1933 Act.
(q) The Company has not at any time since its inception
(i) made any unlawful contribution to any candidate for foreign office or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state regulatory or governmental officer or official,
or any 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.
(r) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization in violation of law or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(s) Each officer and director of the Company and each
beneficial owner of five percent (5%) or more of the Company's Common Stock has
agreed in writing that such person will not, for a period of twelve (12) months
following the date of the Prospectus relating to the public offering of the
Shares (the "Lock-up Period"), offer to sell, contract to sell, or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock, or any securities convertible
into or exchangeable for shares of Common Stock (collectively, "Securities")
owned directly by such person or entity or with respect to which such person or
entity has the power to dispose of as of the date of this Agreement, other than
(i) as a bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction, (ii) as a distribution to limited
partners or stockholders of such person or entity, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, (iii) in a transfer to any other officer, director or beneficial
owner of five percent (5%) or more of the Company's Common Stock, provided that
the transferee agrees in writing to be bound by this restriction, or (iv) with
the prior written consent of Cruttenden Xxxx Incorporated. The foregoing
restriction is expressly agreed to preclude the holder of the Securities from
engaging in any hedging or other transaction that is designed to or reasonably
expected to lead to or result in a Disposition of Securities during the Lock-up
Period, even if such Securities would be disposed of by someone other than such
holder. Such prohibited hedging or other transactions would include, without
limitation, any short sale (whether or not against the box) or any purchase,
sale or grant of any right (including, without limitation, any put or call
option) with respect to any Securities or with respect to any security (other
than a broad-based market basket or index) that includes, relates to or derives
any significant part of its value from the Securities. Furthermore, such
person or entity
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will also agree and consent to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the Securities held by such
person or entity except in compliance with this restriction. The Company has
provided to counsel for the Underwriters a complete and accurate list of all
security holders of the Company and the number and type of securities held by
each security holder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the agreements pursuant to which
its officers, directors and stockholders have agreed to such restrictions (the
"Lock-up Agreements").
(t) Except as set forth in the Registration Statement and
the Prospectus, (i) the Company is in material compliance with all laws, rules
and regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
that are applicable to its business, (ii) the Company has received no notice
from any regulatory or governmental authority or third party of an asserted
claim under any Environmental Laws, which claim is required to be disclosed in
the Registration Statement or the Prospectus, (iii) to its best knowledge, the
Company is not likely to be required to make future material capital
expenditures to comply with any Environmental Laws, and (iv) no property that
is owned and, to the Company's knowledge, no property that is leased or
occupied by the Company, has been designated as a Superfund site pursuant to
the Comprehensive Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. Section 9601, et seq.), or otherwise designated as a contaminated
site under applicable state or local law.
(u) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for property and assets, including, without limitation,
cash receipts, (iii) access to inventory and assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for property and assets is compared with existing
inventory and assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(v) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(w) The Representative's Warrants have been duly and
validly authorized by the Company and upon delivery to you in accordance with
the Representative's Warrant Agreement, will be duly issued and legal, valid
and binding obligations of the Company.
(x) The Representative's Warrant Stock has been duly
authorized and reserved for issuance upon the exercise of the Representative's
Warrants and, when issued upon payment
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of the exercise price therefor, will be validly issued, fully paid and
nonassessable shares of Common Stock of the Company.
(y) All relationships involving control persons within
the meaning of the 1933 Act are accurately and fully described in the
Registration Statement, and there are no relationships between the Company and
any control person that are not fully described in the Registration Statement.
3. PURCHASE, SALE AND DELIVERY OF SHARES. 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 the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $_____________ per share, the
respective number of Firm Shares as set forth in Schedule "A" attached hereto.
The obligation of each Underwriter to the Company shall be to purchase from the
Company that number of Firm Shares set forth opposite the name of such
Underwriter in Schedule "A" attached hereto (subject to adjustment as provided
in Section 10 hereof).
Delivery of definitive certificates evidencing the Firm Shares
to be purchased by the Underwriters pursuant to this Section 3 shall be made
against payment of the purchase price therefor by the several Underwriters by
certified or official bank check or checks drawn in next-day funds, payable to
the order of the Company (and the Company agrees not to deposit any such check
in the bank on which it is drawn until the day following the date of its
delivery to the Company) at the offices of the Representative or such other
place as may be agreed upon by the Representative and the Company, at 8:00
a.m., Los Angeles, California time, on the third (3rd) full business day
following the first day that the Shares begin trading (or at such time and date
to which payment and delivery shall have been postponed pursuant to Section 10
hereof), such time and date of payment and delivery being herein called the
"Closing Date." The Shares will begin trading on the day the Registration
Statement is declared effective by the Commission, or if the Registration
Statement is declared effective after the close of trading, then on the next
trading day. The certificates evidencing the Firm Shares to be so delivered
will be made available to you at such office or such other location as you may
reasonably request for checking at least one (1) full business day prior to the
Closing Date and will be in such names and denominations as you may request,
such request to be made at least two (2) full business days prior to the
Closing Date. If the Representative so elects, delivery of the Firm Shares may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representative.
It is understood that you, individually, and not as the
Representative of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the Closing
Date for the Firm Shares to be purchased by such Underwriter or Underwriters.
Any such payment by you shall not relieve any such Underwriter or Underwriters
of any of its or their obligations hereunder.
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After the Registration Statement becomes effective, the
several Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public
offering price of $___________ per share.
The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), in the
first paragraph on page 2 (concerning stabilization, penalty bids, purchases to
cover short positions and over-allotment by the Underwriters), and in the third
and seventh paragraphs under the caption "Underwriting", in any Preliminary
Prospectus and in the final form of the Prospectus filed pursuant to Rule
424(b), constitutes the only information furnished by the Underwriters to the
Company for inclusion in any Preliminary Prospectus, the Prospectus or the
Registration Statement, and you, on behalf of the respective Underwriters,
represent and warrant to the Company that the statements made therein do 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,
in light of the circumstances under which they were made, not misleading.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company further agrees
with the several Underwriters that:
(a) The Company will use reasonable efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto,
to become effective as promptly as possible; it will notify you, promptly after
it shall receive notice thereof, of the times when the Registration Statement
or any subsequent amendments to the Registration Statement have become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment
to the Registration Statement as originally declared effective by the
Commission; if for any reason the filing of the final form of Prospectus is
required under Rule 424(b)(3) of the Rules and Regulations, it will provide
evidence satisfactory to you that the Prospectus contains such information and
has been filed with the Commission within the time period prescribed; it will
notify you promptly of any request by the Commission for the amendment or
supplementation of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and file
with the Commission any amendments or supplements to the Registration Statement
or the Prospectus that, in the opinion of counsel for the several Underwriters
("Underwriters' Counsel"), may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; it will promptly prepare and
file with the Commission, and promptly notify you of the filing of, any
amendments or supplements to the Registration Statement or the Prospectus that
may be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be delivered under the 1933
Act, any event shall have occurred as a result of which the Prospectus
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or any other prospectus relating to the Shares as then in effect would include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; in case any Underwriter is required to
deliver a prospectus nine (9) months or more after the applicable effective
date of the Registration Statement in connection with the sale of the Shares,
it will prepare promptly upon request, but at the expense of such Underwriter,
such amendment or amendments to the Registration Statement and such prospectus
or prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the 1933 Act; and it will file no amendment or
supplement to the Registration Statement or the Prospectus that shall not
previously have been submitted to you a reasonable time prior to the proposed
filing thereof or to which you shall reasonably object in writing, subject,
however, to compliance with the 1933 Act and the Rules and Regulations of the
Commission thereunder and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if any such stop order should be
issued.
(c) The Company will use reasonable efforts to qualify
the Shares for offer and sale under the securities laws of such states and
jurisdictions as you may designate and to continue such qualifications in
effect for so long as may be required for purposes of the distribution of the
Shares, except that the Company shall not be required in connection therewith
or as a condition thereof to qualify as a foreign corporation or to execute a
general consent to service of process in any state or jurisdiction in which it
is not otherwise required to be so qualified or to so execute a general consent
to service of process. In each state or jurisdiction in which the Shares shall
have been qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be reasonably required by the
laws of such state or jurisdiction.
(d) The Company will furnish to you, as soon as
available, copies of the Registration Statement (three (3) of which will be
signed and will include all exhibits thereto), each Preliminary Prospectus, the
Prospectus and any amendments or supplements to such documents, including any
prospectus prepared to permit compliance with Section 10(a)(3) of the 1933 Act
(three (3) of which will include all exhibits thereto) all in such quantities
as you may from time to time reasonably request.
(e) The Company will make generally available to its
security holders as soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first occurring
after the first anniversary of the effective date of the Registration
Statement, an earnings statement (which will be in reasonable detail but need
not be audited) complying with the provisions of Section 11(a) of the 1933 Act
and covering a twelve (12) month period beginning after the effective date of
the Registration Statement.
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(f) During a period of five (5) years after the date
hereof and for so long as the Company is subject to Section 13 or Section 15 of
the 1934 Act, the Company will furnish to its stockholders as soon as
practicable after the end of each respective fiscal year, annual reports
(including financial statements audited by an independent certified public
accountant) and unaudited quarterly reports of operations for each of the first
three (3) quarters of the fiscal year, and will furnish to you and the other
several Underwriters hereunder, upon request (i) concurrently with furnishing
such reports to its stockholders, statements of operations of the Company for
each of the first three (3) quarters of the fiscal year in the form furnished
to the Company's stockholders, (ii) concurrently with furnishing to its
stockholders, a balance sheet of the Company as of the end of such fiscal year,
together with statements of operations, stockholders' equity, and cash flows of
the Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of the independent certified public accountant, (iii) as soon as
they are available, copies of all reports (financial or otherwise) mailed to
stockholders, (iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, any securities
exchange or the NASD, (v) every material press release and every material news
item or article related to the Company or its affairs that was generally
released to stockholders or prepared by the Company, and (vi) any additional
information of a public nature concerning the Company or its business that you
may reasonably request. During such five (5) year period, if the Company shall
have active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and its
subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary that is not so consolidated.
(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the state or jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its Common
Stock.
(i) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, or if the
Company shall terminate this Agreement pursuant to Section 11(a) hereof, or if
the Underwriters shall terminate this Agreement pursuant to Section 11(b)(i)
hereof, the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including fees and disbursements of Underwriters'
Counsel), but not to exceed an aggregate of $30,000, incurred by the
Underwriters in investigating or preparing to market or marketing the Shares
and shall pay all state securities or "blue sky" filing fees and expenses
(including "blue sky" legal fees) not to exceed an aggregate of $15,000 and, to
the extent any advances to the Underwriters exceed such expenses, the
Underwriter shall return such excess to the Company.
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(j) If at any time during the sixty (60) day period after
the Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
if reasonably requested by you, forthwith prepare, and, if permitted by law,
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(k) During the Lock-up Period, the Company will not,
without the prior written consent of Cruttenden Xxxx Incorporated, effect the
Disposition of, directly or indirectly, any Securities other than (i) the sale
of the Firm Shares and the Option Shares hereunder, (ii) the Company's issuance
of options or Common Stock under the Company's presently authorized stock
option plans or restricted stock plans (collectively, the "Option Plans"), and
(iii) any securities issued in connection with acquisitions.
5. EXPENSES.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and
expenses in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and exhibits
thereto), Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto; the printing of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Preliminary "Blue Sky" Survey
and any Supplemental "Blue Sky" Survey, the Underwriters' Questionnaire and
Power of Attorney, and any instruments related to any of the foregoing; the
issuance and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, the cost of all certificates evidencing the
Shares and transfer agents' and registrars' fees; the fees and disbursements of
counsel and accountants for the Company; all fees and other charges of the
Company's independent certified public accountant; the cost of furnishing to
the several Underwriters copies of the Registration Statement (including
financial statements and appropriate schedules and exhibits thereto),
Preliminary Prospectus and the Prospectus, and any amendments or supplements to
any of the foregoing; NASD filing fees and the cost of qualifying the Shares
under the laws of such states and jurisdictions as you may designate; all state
securities or "blue sky" filing fees and fees and disbursements of
Underwriters' Counsel related to such "blue sky" matters up to a maximum of
$15,000; the Company's road show costs and expenses, the cost of preparing
bound volumes of the documents relating to the public offering of Common Stock
contemplated hereby; and all other expenses directly incurred by the Company in
connection with the performance of its obligations hereunder.
(ii) In addition to its other obligations under
Section 5(a)(i) hereof, the Company will pay to you a non-accountable expense
allowance equal to three percent (3%) of the
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gross sales price of the Shares to the public. This non-accountable expense
allowance with respect to the Firm Shares shall be paid to you on the Closing
Date and the non-accountable expenses with respect to the Option Shares shall
be paid to you on the closing of the sale to you of the Option Shares. The
Company has previously paid to you a fee of $30,000, which shall be credited to
said non-accountable expense allowance.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the accuracy, as of the date hereof and the Closing Date
and any later date on which Option Shares are to be purchased, as the case may
be, of the representations and warranties of the Company and 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 2:00 p.m., Los Angeles, California time, on the day
following the date of this Agreement, or such later date as shall be consented
to in writing by you; and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or any Underwriter, threatened by
the Commission, and any request by the Commission for additional information
(to be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of the Registration Statement and the
Prospectus, and the registration, authorization, issuance, sale and delivery of
the Shares, shall have been reasonably satisfactory to Underwriters' Counsel,
and Underwriters' Counsel shall have been furnished with such documents and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section 6.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date there shall not have been any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company from that set forth in the Registration
Statement or the Prospectus, which, in your sole judgment, is material and
adverse and that makes it, in your sole judgment, impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by the
Prospectus.
(d) You shall have received on the Closing Date and on
any later date on which Option Shares are purchased, as the case may be, the
following opinion of Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C., counsel for the
Company, dated the Closing Date or such later date on which Option Shares are
purchased, addressed to the Underwriters (and stating that it may be relied
upon by LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., Underwriters' Counsel, in
rendering its opinion pursuant to Section 6(e) of this Agreement) and with
reproduced copies or signed counterparts thereof for each of the Underwriters,
to the effect that:
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(i) The Company is a corporation in good standing
under the laws of the jurisdiction of its incorporation;
(ii) The Company has the corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus;
(iii) The Company is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership or leasing of its
properties and assets or the conduct of its business requires
such qualification, except where the failure to be so
qualified or be in good standing would not have a material
adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the
Company taken as a whole. To such counsel's knowledge, the
Prospectus accurately describes any corporation, association
or other entity owned or controlled, directly or indirectly,
by the Company;
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" as of the dates stated
therein, the issued and outstanding shares of capital stock of
the Company have been duly and validly issued and are fully
paid and nonassessable, and, to such counsel's knowledge, have
not been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first
refusal or other similar right;
(v) The Firm Shares and the Option Shares, as the
case may be, to be issued by the Company pursuant to the terms
of this Agreement each have been duly authorized and, upon
issuance and delivery against payment therefor in accordance
with the terms hereof, will be duly and validly issued and
fully paid and nonassessable, and, to such counsel's
knowledge, will not have been issued in violation of or
subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right of the
stockholders;
(vi) The Company has the corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold
by it hereunder;
(vii) The Company has the corporate power and
authority to enter into the Representative's Warrant Agreement
and to issue, sell and deliver to the Representative the
Representative's Warrants to be issued and sold by it
thereunder;
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(viii) Each of this Agreement and the
Representative's Warrant Agreement has been duly authorized by
all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by you, is
a valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification
provisions may be limited by applicable law and to which
counsel need not express any opinion and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general equitable
principles;
(ix) The Registration Statement has become
effective under the 1933 Act and, to such counsel's knowledge,
no stop orders suspending the effectiveness of the
Registration Statement have been issued and no proceedings for
that purpose have been instituted or are pending or threatened
under the 1933 Act;
(x) The Registration Statement and the Prospectus
and each amendment or supplement thereto (other than the
financial statements (including supporting schedules) and
financial and statistical data included in the Registration
Statement, as to which such counsel need express no opinion),
as of its effective date, and with respect to the Prospectus
as of April ______, 1998, complied as to form in all material
respects with the requirements of the 1933 Act and the
applicable Rules and Regulations;
(xi) The information in the Prospectus under the
captions (a) "Description of Securities" and "Shares Eligible
For Future Sale," to the extent that the same constitutes a
matter of law or a legal conclusion, has been reviewed by such
counsel and is a fair summary of such matters and conclusions,
and (b) "Business," to the extent that it reflects matters of
law or summaries of laws or regulations, is correct in all
material respects (provided that such counsel need not express
any opinion as to its completeness);
(xii) The form of certificate evidencing the Common
Stock and filed as an exhibit to the Registration Statement
complies with Delaware law;
(xiii) The descriptions in the Registration
Statement and the Prospectus of the Certificate of
Incorporation and Bylaws of the Company and of any applicable
statutes are accurate and fairly present the information
required to be presented by the 1933 Act and the applicable
Rules and Regulations (provided that such counsel need not
express any opinion as to its completeness);
(xiv) To such counsel's knowledge, there are no
agreements, contracts, leases or documents to which the
Company is a party of a character required to be described or
referred to in the Registration Statement or the Prospectus or
to be
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filed as an exhibit to the Registration Statement that are not
described or referred to in this Agreement or filed as
required;
(xv) The performance of this Agreement and the
Representative's Warrant Agreement and the consummation of the
transactions herein and therein contemplated (other than
performance of the Company's indemnification obligations
hereunder or under the Representative's Warrant Agreement,
concerning which no opinion need be expressed) will not (a)
result in any violation of the Company's Certificate of
Incorporation or Bylaws or (b) to such counsel's knowledge,
result in a material breach or violation of any of the terms
and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or under
any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture agreement, or other agreement or
instrument known to such counsel to which the Company is a
party or by which its properties or assets are bound, or any
applicable statute, law, rule or regulation known to such
counsel or, to such counsel's knowledge, any order, writ or
decree of any court, government or governmental agency or body
having jurisdiction over the Company or over any of its
properties, assets or operations;
(xvi) To such counsel's knowledge, no consent,
approval, authorization or order of or qualification with any
court, government, or regulatory or governmental agency or
body having jurisdiction over the Company or over any of its
properties, assets or operations is necessary in connection
with the consummation by the Company of the transactions
contemplated by the Agreement, except such as have been
obtained under the 1933 Act or as may be required by the NASD,
the National Market System or under any state or other
securities or "blue sky" laws, rules or regulations in
connection with the purchase and distribution of the Shares by
the Underwriters;
(xvii) To such counsel's knowledge, there are no
legal, regulatory or governmental proceedings pending or
threatened against the Company of a character required to be
disclosed in the Registration Statement or the Prospectus by
the 1933 Act or the Rules and Regulations or by the 1934 Act
or the applicable rules and regulations of the Commission
thereunder, other than those described therein;
(xviii) The Representative's Warrants have been duly
and validly authorized by the Company and, upon delivery to
you in accordance with the Representative's Warrant Agreement,
will be duly issued and legal, valid and binding obligations
of the Company;
(xix) The Representative's Warrant Stock to be
issued by the Company pursuant to the terms of the
Representative's Warrant has been duly authorized
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and, upon issuance and delivery against payment therefor in
accordance with the terms of the Representative's Warrant
Agreement, will be duly and validly issued and fully paid and
nonassessable, and, to such counsel's knowledge, will not have
been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first
refusal or other similar right of the stockholders;
(xx) To such counsel's knowledge, no holders of
Common Stock or other securities of the Company have
registration rights with respect to any securities of the
Company; and
(xxi) The offer and sale of all outstanding
securities of the Company made since its inception as set
forth in the Registration Statement were exempt from the
registration requirements of the 1933 Act and from the
registration or qualification requirements of all relevant
state securities or "blue sky" laws, rules and regulations.
In addition, such counsel shall state that such
counsel has participated in conferences with officials and other
representatives of the Company, the Representative, Underwriters' Counsel and
the independent certified public accountant for the Company, at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and although (except as specifically set forth in paragraphs
(xi) and (xiii) above) they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel that leads such counsel to
believe that, at the time the Registration Statement became effective and at
all times subsequent thereto up to and on the Closing Date and on any later
date on which Option Shares are to be purchased, the Registration Statement and
any amendments or supplements thereto, when such documents became effective or
were filed with the Commission (other than the financial statements, including
supporting schedules and other financial and statistical data included in the
Registration Statement, as to which such counsel need express no comment)
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, or on the Closing Date or any later date on which the
Option Shares are to be purchased, as the case may be, the Registration
Statement, the Prospectus and any amendment or supplement thereto contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Counsel rendering the foregoing opinion may rely as
to questions of law not involving the laws of the United States or the State of
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company, and of government
officials, in which case such counsel's opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to
you, as Representative of the Underwriters, and to Underwriters' Counsel.
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(e) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
an opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. in form and substance
reasonably satisfactory to you, with respect to the sufficiency of all such
corporate proceedings and other legal matters relating to this Agreement and
the transactions contemplated hereby as you may reasonably require, and the
Company shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
a letter from Cherry, Bekaert & Holland, L.L.P., addressed to the Company and
the Underwriters, dated the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, confirming that they are
independent certified public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable Rules and Regulations and based upon
the procedures described in such letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but carried
out to a date not more than five (5) business days prior to the Closing Date or
such later date on which Option Shares are to be purchased, as the case may be,
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be, and (ii)
setting forth any revisions and additions to the statements and conclusions set
forth in the Original Letter that are necessary to reflect any changes in the
facts described in the Original Letter since the date of the Original Letter,
or to reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or the
Prospectus, which, in your sole judgment, is material and adverse and that
makes it, in your sole judgment, impracticable or inadvisable to proceed with
the public offering of the Shares as contemplated by the Prospectus. The
Original Letter from Cherry, Bekaert & Holland, L.L.P. shall be addressed to or
for the use of the Underwriters in form and substance satisfactory to the
Underwriters and shall (i) represent, to the extent true, that they are
independent certified public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable Rules and Regulations, (ii) set
forth its opinion with respect to its examination of the balance sheets of the
Company as of December 31, 1996 and 1997, and the related statements of
operations, stockholders' equity, and cash flows for the years then ended, and
(iii) address other matters agreed upon by Cherry, Bekaert & Holland, L.L.P.
and you. In addition, you shall have received from Cherry, Bekaert & Holland,
L.L.P. a letter addressed to the Company and made available to you for the use
of the Underwriters stating that its review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of its examination of the Company's financial statements as of December
31, 1997, did not disclose any weaknesses in internal controls that they
considered to be material weaknesses.
(g) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
a certificate from the Company, dated the
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Closing Date or such later date on which Option Shares are to be purchased, as
the case may be, signed by the President and the Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on
and as of the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be, and the
Company has complied, in all material aspects, with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied, in all material respects, at or prior
to the Closing Date or any later date on which Option Shares
are to be purchased, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to their knowledge,
are pending or threatened under the 1933 Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such officer's certificate, the Registration
Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information
required to be included therein by the 1933 Act and the Rules
and Regulations or the 1934 Act and the applicable rules and
regulations of the Commission thereunder, as the case may be,
and in all material respects conformed to the requirements of
the 1933 Act and the Rules and Regulations or the 1934 Act and
the applicable rules and regulations of the Commission
thereunder, as the case may be, the Registration Statement,
and any amendment or supplement thereto, did not and does 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, the
Prospectus, and any amendment or supplement thereto, did not
and does not include any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, and, since the effective date
of the Registration Statement, there has occurred no event
that is required to be set forth in an amended or supplemented
Prospectus that has not been so set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and
the Prospectus, there has not been (a) any material adverse
change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company, (b)
any transaction that is material to the Company, except
transactions entered into in the ordinary course of its
business, (c) any obligation, direct or contingent, that is
material to the Company, incurred by the Company, except
obligations incurred in the ordinary course of its business,
(d) any change in the capital stock or outstanding
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indebtedness of the Company that is material to the Company,
(e) any dividend or distribution of any kind or nature
declared, paid or made on the capital stock of the Company
(other than the distributions made to the Existing Common
Stockholders (as that term is defined in the Prospectus), as
disclosed under "S Corporation Distributions" therein), or (f)
any loss or damage (whether or not insured) to the property or
assets of the Company that had a material adverse effect on
the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(h) The Company shall have obtained and delivered
to you a written agreement from each officer and director of
the Company, and each beneficial owner of five percent (5%) or
more of the Common Stock immediately after the offering
contemplated hereby, prior to the date hereof that such person
or entity will not, during the Lock-up Period, effect the
Disposition of any Securities owned directly by such person or
entity or with respect to which such person or entity has the
power of disposition as of the date of this Agreement,
otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agrees in writing to be bound by this
restriction, (ii) as a distribution to limited partners or
stockholders of such person or entity, provided that the
distributees thereof agree in writing to be bound by the terms
of this restriction, (iii) in a transfer to any other officer,
director or beneficial owner of five percent (5%) or more of
the Company's Common Stock, provided that the transferees
thereof agree in writing to be bound by this restriction, or
(iv) with the prior written consent of Cruttenden Xxxx
Incorporated. The foregoing restriction is expressly agreed to
preclude the holder of the Securities from engaging in any
hedging or other transaction that is designed to or reasonably
expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be
disposed of by someone other than the such holder. Such
prohibited hedging or other transactions would include,
without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to
any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to
or derives any significant part of its value from the
Securities. Furthermore, such person or entity will have also
agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the
transfer of the Securities held by such person or entity
except in compliance with this restriction.
(i) The Company shall have furnished to you such
further certificates and documents as you shall request,
including, without limitation, certificates of officers of the
Company as to the accuracy of the representations and
warranties of the Company herein, the performance by the
Company of its obligations hereunder, and as to the other
conditions concurrent and precedent to the obligations of the
Underwriters hereunder.
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23
(j) The Representative's Warrant Agreement shall
have been entered into by the Company and you, and the
Representative's Warrants shall have been issued and sold to
you pursuant thereto.
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are satisfactory to
Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall request.
7. OPTION 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 hereby grants to the several Underwriters, for the purpose
of covering over-allotments in connection with the distribution and sale of the
Firm Shares only, a nontransferable option to purchase up to an aggregate of
three hundred thousand (300,000) Option Shares at the purchase price per share
for the Firm Shares set forth in Section 3 hereof. Such option may be
exercised by the Representative on behalf of the several Underwriters on one
(1) or more occasions in whole or in part during the period of forty-five (45)
days after the date on which the Firm Shares are initially offered to the
public, by giving written notice to the Company. The number of Option Shares
to be purchased by each Underwriter upon the exercise of such option shall be
the same proportion of the total number of Option Shares to be purchased by the
several Underwriters pursuant to the exercise of such option as the number of
Firm Shares purchased by such Underwriter (as set forth in Schedule "A"
attached hereto) bears to the total number of Firm Shares purchased by the
several Underwriters (as set forth in Schedule "A" attached hereto), adjusted
by the Representative in such manner as to avoid fractional shares.
Delivery of definitive certificates evidencing the
Option Shares to be purchased by the several Underwriters pursuant to the
exercise of the option granted by this Section 7 shall be made against payment
of the purchase price therefor by the several Underwriters by certified or
official bank check or checks drawn in next-day funds, payable to the order of
the Company (and the Company agrees not to deposit any such check in the bank
on which it is drawn until the day following the date of its delivery to the
Company). Such delivery and payment shall take place at the offices of the
Representative, or at such other place as may be agreed upon between the
Representative and the Company (i) on the Closing Date, if written notice of
the exercise of such option is received by the Company at least three (3) full
business days prior to the Closing Date, or (ii) on a date that shall not be
later than the fifth (5th) full business day following the date the Company
receives written notice of the exercise of such option, if such notice is
received by the Company less than three (3) full business days prior to the
Closing Date.
The certificates evidencing the Option Shares to be
so delivered will be made available to you at such office or such other
location as you may reasonably request for inspection at least two (2) full
business days prior to the date of payment and delivery and will be in such
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names and denominations as you may request, such request to be made at least
three (3) full business days prior to such date of payment and delivery. If
the Representative so elects, delivery of the Option Shares may be made by
credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representative.
It is understood that you, individually, and not as
the Representative of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the date of payment and delivery for the Option Shares to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any
such Underwriter or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of the option provided for in Section
7(a) hereof, the obligations of the several Underwriters to purchase such
Option Shares will be subject (as of the date hereof and as of the date of
payment and delivery for such Option Shares) to the accuracy of and compliance
with the representations, warranties and agreements of the Company herein, to
the accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the condition that all proceedings taken at or
prior to the payment date in connection with the sale and transfer of such
Option Shares shall be reasonably satisfactory in form and substance to you and
to Underwriters' Counsel, and you shall have been furnished with all such
documents, instruments, certificates and opinions as you may reasonably request
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any of the
covenants or agreements of the Company, or the compliance with any of the
conditions herein contained in each case in all material respects.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter within the meaning of Rule 2720
of the Bylaws of the NASD (formerly Schedule E to the NASD Bylaws), under the
1933 Act, the 1934 Act or otherwise, specifically including, but not limited
to, losses, claims, damages or liabilities, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any breach of any representation, warranty, agreement or
covenant of the Company herein contained, (ii) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
or any amendment or supplement thereto, or the 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 under which they
were made, not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or in
the Prospectus or any amendment or supplement thereto, or the 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
under
-24-
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which they were made, not misleading, and further agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus or in the Prospectus, or any amendment or supplement
thereto, in reliance upon, and in conformity with, written information relating
to any Underwriter furnished to the Company by such Underwriter, directly or
through you, specifically for use in the preparation thereof; provided further,
however, that the indemnity agreement provided in this Section 8(a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person or entity asserting any losses, claims,
damages, liabilities or actions based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus in which
such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person or entity
within the time required by the 1933 Act and the Rules and Regulations, unless
such failure is the result of noncompliance by the Company with Section 4(d)
hereof.
The indemnity agreement in this Section 8(a) shall
extend upon the same terms and conditions to, and shall inure to the benefit
of, each person or entity, if any, who controls any Underwriter within the
meaning of the 1933 Act or the 1934 Act. This indemnity agreement shall be in
addition to any liabilities that the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company against any losses, claims, damages
or liabilities, joint or several, to which the Company may become subject under
the 1933 Act or otherwise, specifically including, but not limited to, losses,
claims, damages or liabilities, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any breach of any representation, warranty, agreement or covenant of such
Underwriter contained herein, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or in
any amendments or supplements thereto, or the 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 under which they
were made, not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or in
the Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, in the case of subparagraphs (ii) and (iii) of this Section
8(b) to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter, directly or through you, specifically for use in the
preparation thereof, and agrees to reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action.
-25-
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The indemnity agreement in this Section 8(b) shall
extend upon the same terms and conditions to, and shall inure to the benefit
of, each officer of the Company who signed the Registration Statement and each
director of the Company and each person or entity, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act. This indemnity
agreement shall be in addition to any liabilities each Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, 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 that it may have to
any indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties that are different from or in addition to those
available to the indemnifying party that pose a conflict of interest for such
counsel, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise 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
the indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of such counsel, the indemnifying party will
not be liable to such indemnified party under this Section 8 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
separate counsel 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 (1) separate counsel (together with
appropriate local counsel) approved by the indemnifying party representing all
the indemnified parties under Section 8(a) or Section 8(b) hereof who are
parties to such action), (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, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party. In
no event shall any indemnifying party be liable in respect of any amounts paid
in settlement of any action unless the indemnifying party shall have approved
the terms of such settlement in writing in advance; provided, however, that
such consent shall not be unreasonably withheld. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding or action in respect of
which any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of
-26-
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such indemnified party from all liability on claims that are the subject matter
of such indemnification.
(d) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
pursuant to this Section 8 but in which it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 8 provides for indemnification in such case, all the
parties hereto shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Underwriters severally and not jointly are
responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company is responsible for the remaining portion; provided, however, that (i)
no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
and (ii) no person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. The
contribution agreement in this Section 8(d) shall extend upon the same terms
and conditions to, and shall inure to the benefit of, each person or entity, if
any, who controls each of the Underwriters or the Company within the meaning of
the 1933 Act or the 1934 Act and each officer of the Company who signed the
Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof, including, without
limitation, the provisions of this Section 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is
made in the Registration Statement and the Prospectus as required by the 1933
Act and the 0000 Xxx. The parties are advised that federal or state public
policy, as interpreted by the courts in certain jurisdictions, may be contrary
to certain of the provisions of this Section 8, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public
policy as a defense to a claim under this Section 8 and further agree not to
attempt to assert any such defense.
9. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties, covenants and agreements of
the Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 8
hereof, shall remain operative and in full force and effect for a period of the
applicable federal and state statutes of limitations regardless of any
investigation made by or on behalf of any Underwriter or any control person
within the meaning of the 1933 Act or the 1934 Act, or by or on behalf of the
Company or any of its officers, directors or control persons within the meaning
of the 1933 Act or the 1934 Act, and shall survive the delivery of the Shares
to the several Underwriters hereunder and the termination of this Agreement.
-27-
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10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares agreed
by such Underwriter or Underwriters to be purchased hereunder upon tender of
such Firm Shares in accordance with the terms hereof, and if the aggregate
number of Firm Shares that such defaulting Underwriter or Underwriters so
agreed but fails to purchase does not exceed ten percent (10%) of the Firm
Shares, the remaining Underwriters shall be obligated, severally in proportion
to their respective commitments hereunder, to take up and pay for the Firm
Shares of such defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the
aggregate number of Firm Shares that such defaulting Underwriter or
Underwriters agreed but fails to take up and pay for exceeds ten percent (10%)
of the Firm Shares, the remaining Underwriters shall have the right, but shall
not be obligated, to take up and pay for (in such proportions as may be agreed
upon among them) the Firm Shares that the defaulting Underwriter or
Underwriters so agreed but fail to purchase. If such remaining Underwriters do
not, on the Closing Date, take up and pay for the Firm Shares that the
defaulting Underwriter or Underwriters so agreed but fail to purchase, the
Closing Date shall be postponed for twenty-four (24) hours to allow the several
Underwriters the opportunity of substituting within said twenty-four (24) hours
(including non-business hours) another underwriter or underwriters (which may
include any non-defaulting Underwriter or Underwriters) reasonably satisfactory
to the Company. If no such underwriter or underwriters shall have been
substituted as aforesaid by such postponed Closing Date, the Closing Date may,
at the option of the Company, be postponed for an additional twenty-four (24)
hours, if necessary, to allow the Company the opportunity of finding another
underwriter or underwriters, satisfactory to you, to purchase the Firm Shares
that the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If it shall be arranged for the remaining Underwriters or
substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven (7) full business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to the
Prospectus that may thereby be made necessary, and (ii) the respective number
of Firm Shares to be purchased by the remaining Underwriters and substituted
underwriter or underwriters shall be taken as the basis of their underwriting
obligation. If the remaining Underwriters shall not take up and pay for all
such Firm Shares so agreed to be purchased by the defaulting Underwriter or
Underwriters or substitute another underwriter or underwriters as aforesaid and
the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
In the event of the termination of this Agreement pursuant to
the preceding paragraph of this Section 10, the Company shall not be liable to
any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than
for some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which
-28-
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Underwriter shall remain liable to the Company and the other Underwriters for
damages, if any, resulting from such default) be liable to the Company (except
to the extent provided in Sections 5 and 8 hereof).
The term "Underwriter" as used in this Agreement shall include
any person or entity substituted for an Underwriter under this Section 10.
11. EFFECTIVE DATE OF THIS AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at the earlier
of (i) 6:30 a.m., Los Angeles, California time, on the second (2nd) full
business day following the latest of the effective date of the Registration
Statement, or (ii) the time of the initial public offering of any of the Shares
by the Underwriters after the Registration Statement becomes effective. The
time of the initial public offering shall mean the time of the release by you,
for publication, of the first newspaper advertisement relating to the Shares,
or the time at which the Shares are first generally offered by the Underwriters
to the public by letter, telephone, telegram or telecopy, whichever shall first
occur. By giving notice as set forth in Section 12 hereof before the time this
Agreement becomes effective, you, as Representative of the several
Underwriters, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Sections 4(i), 5 and 8 hereof.
(b) You, as Representative of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or on or
prior to any later date on which Option Shares are to be purchased, as the case
may be, (i) if the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because any other condition of
the Underwriters' obligations hereunder required to be fulfilled is not
fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or the
Prospectus, which, in your sole judgment, is material and adverse to the
Company, or (ii) if additional material regulatory or governmental
restrictions, not in force and effect 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, 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 if a banking moratorium shall have
been declared by federal, New York or California authorities, or (iii) if the
Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as to interfere materially with
the conduct of the business and operations of the Company regardless of whether
or not such loss shall have been insured, or (iv) if there shall have been a
material adverse change in the general political, regulatory or economic
conditions or financial markets that affects the issuer and materially impairs
the investment quality of the Shares and that, in your reasonable judgment,
makes it inadvisable or impracticable to proceed with the offer, sale and
delivery of the Shares, or (v) if there shall have been an outbreak or
escalation of
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hostilities or of any other insurrection or armed conflict or the declaration
by the United States of a national emergency that, in the opinion of the
Representative, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. Any
termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party, except as provided in
Sections 4(i), 5 and 8 hereof; provided, however, that the Company will
reimburse the Representative for a maximum of $30,000 for its out-of- pocket
expenses (which $30,000 was paid by the Company upon the execution of the
Letter of Intent with the Representative). In the event of termination
pursuant to subparagraph (i) above, the Company shall also remain obligated to
pay costs and expenses pursuant to Sections 4(i), 5 and 8 hereof (in addition
to the out-of-pocket expenses identified in Section 4(i) hereof).
If you elect to prevent this Agreement from becoming effective
or terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed
by letter. If the Company elects to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case promptly confirmed by letter.
12. NOTICES. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, hand-delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to you c/o Cruttenden Xxxx Incorporated,
00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, telecopier number (714)
852-9603, Attention: Xxxxxxxxxxx X. Xxxxxxxx and Xxxxx Xxxxxxxx; and, if sent
to the Company, such notice shall be mailed, hand-delivered, telegraphed (and
confirmed by letter) or telecopied (and confirmed by letter) to 0000 Xxxxxx
Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxx Xxxxxxxx 00000, telecopier number (803)
548-2207, Attention: Xxxx X. Xxxxx.
13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or entity, other than the parties hereto and their respective executors,
administrators, successors and assigns, and their control persons within the
meaning of the 1933 Act or the 1934 Act, and the officers and directors
referred to in Section 8 hereof, any legal or equitable right, remedy or claim
in respect of this Agreement or any provisions contained herein, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective
executors, administrators, successors and assigns and said control persons and
said officers and directors, and for the benefit of no other person or entity.
No purchaser of any of the Shares from any Underwriter shall be construed as
being a successor or assign of such Underwriter by reason merely of such
purchase. This Agreement constitutes the entire agreement and understanding of
the parties with respect to the subject matter hereof.
In all dealings with the Company under this Agreement, you
shall act on behalf of each of the several Underwriters, and the Company shall
be entitled to act and rely upon any
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statement, request, notice or agreement made or given by you on behalf of each
of the several Underwriters.
14. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing correctly sets forth the understanding among
the Company and the several Underwriters, please so indicate in the space
provided below for that purpose, whereupon this Agreement shall constitute a
binding agreement among the Company and the several Underwriters as provided
herein.
Very truly yours,
AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED
By: ------------------------------------
Xxxx X. Xxxxx
Its: President
ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN:
CRUTTENDEN XXXX INCORPORATED,
on its behalf and on behalf of each of the several
Underwriters named in Schedule "A" attached hereto.
CRUTTENDEN XXXX INCORPORATED
By:
---------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
33
SCHEDULE "A"
NUMBER OF
FIRM
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Cruttenden Xxxx Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________
[SYNDICATE MEMBERS TO BE ADDED]
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
=========
