<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1997
REGISTRATION NO. 333-35069
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SOUTHERN ELECTRONICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-2715444
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
4916 NORTH ROYAL ATLANTA DRIVE, ATLANTA, GEORGIA 30085
(770) 491-8962
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
RAY D. RISNER
SOUTHERN ELECTRONICS CORPORATION
4916 NORTH ROYAL ATLANTA DRIVE
ATLANTA, GEORGIA 30085
(770) 491-8962
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
LEONARD A. SILVERSTEIN, ESQ. WADE H. STRIBLING, ESQ.
LONG ALDRIDGE & NORMAN LLP NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
SUITE 5300 FIRST UNION PLAZA, SUITE 1400
303 PEACHTREE STREET 999 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308 ATLANTA, GEORGIA 30309
(404) 527-4000 (404) 817-6000
FACSIMILE (404) 527-4198 FACSIMILE (404) 817-6050
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL
EXPENSES*
---------
<S> <C>
Securities and Exchange Commission registration fee................... $ 16,858
NASD filing fee....................................................... 6,063
Nasdaq National Market listing fee.................................... 17,500
Printing expenses..................................................... 125,000
Accounting fees and expenses.......................................... 120,000
Legal fees and expenses............................................... 175,000
Blue Sky fees and expenses (including legal fees)..................... 5,000
Registrar and Transfer Agent's fees and expenses...................... 7,500
Miscellaneous......................................................... 77,079
--------
Total............................................................. $550,000
========
</TABLE>
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* The foregoing amounts, except for the SEC registration fee, the NASD filing
fee and the Nasdaq National Market listing fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law. The Registrant has statutory authority to
indemnify its officers and directors. The applicable provisions of the
Delaware General Corporation Law (the "DGCL") state that, to the extent such
person is successful on the merits or otherwise, a corporation must indemnify
any person who was or is a party or who is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(collectively, "such Person"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such Person. In addition, the DGCL provides that a corporation may
indemnify any such Person (other than in an action by or in the right of the
corporation) against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Additionally, the corporation may indemnify any such Person who was or is a
party, or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such Person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper. The
II-1
<PAGE>
termination of any action, suit or proceeding by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that such Person did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
Under the applicable provisions of the DGCL, any indemnification, unless
ordered by a court, shall be made by a corporation only as authorized in the
specific case upon a determination that the indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct. Such determination shall be made:
(1) By a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum; or
(2) If there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a
written opinion; or
(3) By the affirmative vote of a majority of the shares entitled to vote
thereon.
Indemnification of expenses incurred by an officer or director in defending
any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such officer or director to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized by the DGCL.
Bylaws. Article XI of the Bylaws of the Registrant sets forth the extent to
which the Registrant's directors and officers may be indemnified by the
Registrant against liabilities which they may have incurred while serving in
such capacities. Such indemnification is authorized by Section 145 of the
DGCL. The Bylaws provide that the Registrant shall indemnify, to the full
extent and under the circumstances permitted by the DGCL in effect from time
to time, any past, present or future director or officer of the Registrant or
a designated officer of an operating division of the Registrant, made or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director or officer of the
Registrant or a designated officer of an operating division of the Registrant,
or is or was an employee or agent of the Registrant, or is or was serving at
the specific request of the Registrant as a director, officer, employee or
agent of another company or other enterprise in which the Registrant should
own, directly or indirectly, an equity interest or of which it may be a
creditor. This right of indemnification shall not be deemed exclusive of any
other rights to which such a Person would be entitled by law, agreement, vote
of stockholders or disinterested directors or otherwise, and shall continue as
to such a Person who has ceased to be a director, officer, designated officer,
employee or agent and shall inure to the benefit of the heirs, executors,
administrators and other legal representatives of such Person. The Board of
Directors of the Registrant may also grant, on behalf of the Registrant,
indemnification to any individual other than such a Person to such extent and
in such a manner as the Board in its sole discretion may from time to time and
at any time determine.
Charter. Article VIII of the Registrant's Certificate of Incorporation also
provides that, to the fullest extent permitted by DGCL, a director of the
Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director.
The Registrant maintains insurance, at its expense, to protect any director
or officer of the Registrant or its subsidiary against certain expenses,
liabilities or losses.
Reference is made to Section 7 of the Underwriting Agreement filed as
Exhibit 1.1 hereto.
II-2
<PAGE>
ITEM 16. EXHIBITS
(A) EXHIBITS. The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
1.1 Form of Underwriting Agreement.
Certificate of Incorporation, as amended, of Southern Electronics
+4.1 Corporation (the "Registrant").(1)
+4.2 Amended and Restated By-Laws of the Registrant.(2)
+4.3 Form of Rights Agreement, dated as of October 31, 1996 between the
Registrant and National City Bank.(3)
Opinion of Long Aldridge & Norman LLP as to the validity of the Common
+5.1 Stock being registered.
23.1 Independent Auditors' Consent.
Consent of Long Aldridge & Norman LLP (included in its Opinion filed
+23.2 as Exhibit 5.1).
+24.1 Powers of Attorney.
</TABLE>
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+ Previously filed.
(1) Incorporated herein by reference to Exhibit 3.1 to Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995 (SEC File No.
016345).
(2) Incorporated herein by reference to exhibit of same number to Registrant's
Registration Statement on Form S-1, filed September 5, 1986 (Reg. No.
338494).
(3) Incorporated herein by reference to Exhibit 7 to the Registrant's Current
Report on Form 8-K dated October 30, 1996.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Act"), the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Tucker, State of Georgia, on September 19,
1997.
SOUTHERN ELECTRONICS CORPORATION
/s/ Gerald Diamond
By: ____________________________________
Gerald Diamond
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board, Chief September 19, 1997
_________________________________ Executive Officer and
GERALD DIAMOND Director (principal
executive officer)
/s/ Larry G. Ayers Vice President-Finance, September 19, 1997
_________________________________ Chief Financial Officer and
LARRY G. AYERS Treasurer (principal
financial officer and
principal accounting
officer)
* Director September 19, 1997
_________________________________
STEWART I. AARON
* Director September 19, 1997
_________________________________
MARK DIAMOND
* Director September 19, 1997
_________________________________
RAY D. RISNER
* Director September 19, 1997
_________________________________
CARY ROSENTHAL
Director
_________________________________
G. WILLIAM SPEER
* By: /s/ Larry G. Ayers
----------------------------
Larry G. Ayers,
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT 1.1
3,000,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
September , 1997
A.G. Edwards & Sons, Inc.
Cleary Gull Reiland & McDevitt Inc.
Interstate/Johnson Lane Corporation
C.L. King & Associates, Inc.
As Representative of the Several Underwriters
c/o A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned, Southern Electronics Corporation, a Delaware corporation
(the "Company") hereby addresses you as the representatives (the
"Representatives") of each of the persons, firms and corporations listed on
Schedule I hereto (collectively, the "Underwriters") and hereby confirms its
agreement with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to the
Underwriters 3,000,000 shares of its Common Stock, par value $.01 per share
(the "Firm Shares"). Solely for the purpose of covering over-allotments in the
sale of the Firm Shares, the Company further proposes to grant to the
Underwriters the right to purchase up to an additional amount of shares equal
to 15% of the Firm Shares (the "Option Shares"), as provided in Section 3 of
this Underwriting Agreement. The Firm Shares and the Option Shares are herein
sometimes referred to as the "Shares" and are more fully described in the
Prospectus hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM 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 each
of the Underwriters, and each such Underwriter agrees, severally and not
jointly, (a) to purchase from the Company, at a purchase price of $ per
share, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and (b) to purchase from the Company any
additional number of Option Shares which such Underwriter may become obligated
to purchase pursuant to Section 3 hereof.
The Company will deliver definitive certificates or a global certificate for
the Firm Shares at the office of A.G. Edwards & Sons, Inc., 77 Water Street,
New York, New York ("Edwards' Office"), or such other place as you and the
Company may mutually agree upon, for the accounts of the Underwriters against
payment to the Company of the purchase price for the Firm Shares sold by it to
the several Underwriters by same day wire transfer or certified or bank
cashiers' check in clearing house funds payable to the order of the Company,
and delivered to 303 Peachtree Street, 53rd Floor, Atlanta, Georgia 30308, or
at such other place as may be agreed upon between you and the Company (the
"Place of Closing"), at 10:00 a.m., Atlanta time, on the third full business
day following the date of this Underwriting Agreement, or at such other time
and date thereafter as you and the Company may agree, such time and date of
payment and delivery being herein called the "Closing Date."
The certificates for the Firm Shares so to be delivered will be made
available to you for inspection at Edwards' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior
to the Closing Date and will be in such names and denominations as you may
request at least two full business days prior to the Closing Date. If the
Representatives so elect, 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 Representatives.
<PAGE>
It is understood that an Underwriter, individually, may (but shall not be
obligated to) make payment on behalf of the other Underwriters whose checks
shall not have been received prior to the Closing Date for Shares to be
purchased by such Underwriter. Any such payment by an Underwriter shall not
relieve the other Underwriters of any of their obligations hereunder.
It is understood that the Underwriters propose to offer the Shares to the
public upon the terms and conditions set forth in the Registration Statement
(as hereinafter defined).
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company hereby
grants an option to the Underwriters to purchase from it up to 450,000 Option
Shares on the same terms and conditions as the Firm Shares; provided, however,
that such option may be exercised only for the purpose of covering any over-
allotments which may be made by them in the sale of the Firm Shares. No Option
Shares shall be sold or delivered unless the Firm Shares previously have been,
or simultaneously are, sold and delivered.
The option is exercisable on behalf of the several Underwriters by you, as
Representatives, at any time, and from time to time, before the expiration of
30 days from the date of this Underwriting Agreement, for the purchase of all
or part of the Option Shares covered thereby, by notice given by you to the
Company in the manner provided in Section 12 hereof, setting forth the number
of Option Shares as to which the Underwriters are exercising the option, and
the date of delivery of said Option Shares, which date shall not be more than
five business days after such notice unless otherwise agreed to by the
parties. You may terminate the option at any time, as to any unexercised
portion thereof, by giving written notice to the Company to such effect.
You, as Representatives, shall make such allocation of the Option Shares
among the Underwriters as may be required to eliminate purchases of fractional
Shares.
Delivery of the Option Shares with respect to which the options shall have
been exercised shall be made to or upon your order at the offices of Long
Aldridge & Norman in Atlanta, Georgia (or at such other place as you and the
Company may mutually agree upon), against payment by you of the per share
purchase price to the Company by same day wire transfer or certified or bank
cashier's check or checks, payable in clearing house funds. Such payment and
delivery shall be made at 10:00 a.m., Atlanta time, on the date designated in
the notice given by you as above provided for, unless some other date and time
are agreed upon, which date and time of payment and delivery are called the
"Option Closing Date." The certificates for the Option Shares so to be
delivered will be made available to you for inspection at Edwards' Office at
least one full business day prior to the Option Closing Date and will be in
such names and denominations as you may request at least two full business
days prior to the Option Closing Date. If the Representatives so elect,
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
Representatives. On the Option Closing Date, the Company shall provide the
Underwriters such representations, warranties, opinions and covenants with
respect to the Option Shares as are required to be delivered on the Closing
Date with respect to the Firm Shares.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
(a)The Company represents and warrants to and agrees with each Underwriter
that:
(i) A registration statement (Registration No. 333-35069) on Form S-3
with respect to the Shares, including a preliminary prospectus, and such
amendments to such registration statement as may have been required to the
date of this Underwriting Agreement, has been prepared by the Company
pursuant to and in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the Rules and Regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission under the
Act. Copies of such registration statement, including any amendments
thereto, each related preliminary prospectus (meeting the requirements of
Rule 430 or 430A of the Rules and Regulations) contained therein, the
exhibits, financial statements and schedules have heretofore been delivered
by the Company to you. If such registration
2
<PAGE>
statement has not become effective under the Act, a further amendment to
such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective will be
filed promptly by the Company with the Commission. If such registration
statement has become effective under the Act, a final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule
430A of the Rules and Regulations will be filed promptly by the Company
with the Commission in accordance with Rule 424(b) of the Rules and
Regulations. The term "Registration Statement" as used herein means the
registration statement as amended at the time it becomes or became
effective under the Act (the "Effective Date"), including financial
statements and all exhibits and, if applicable, the information deemed to
be included by Rule 430A of the Rules and Regulations. The term
"Prospectus" as used herein means (i) the prospectus, including all
information incorporated by reference therein, as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, (ii) if
no such filing is required, the form of final prospectus included in the
Registration Statement at the Effective Date or (iii) if a Term Sheet or
Abbreviated Term Sheet (as such terms are defined in Rule 434(b) and
434(c), respectively, of the Rules and Regulations) is filed with the
Commission pursuant to Rule 424(b)(7) of the Rules and Regulations, the
Term Sheet or Abbreviated Term Sheet and the last Preliminary Prospectus
filed with the Commission prior to the time the Registration Statement
became effective, taken together. The term "Preliminary Prospectus" as used
herein shall mean a preliminary prospectus, including all information
incorporated by reference therein, as contemplated by Rule 430 or 430A of
the Rules and Regulations included at any time in the Registration
Statement.
(ii) The Commission has not issued, and is not to the knowledge of the
Company threatening to issue, an order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus nor instituted proceedings for
that purpose. Each Preliminary Prospectus has not included any untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, which has not subsequently been
corrected in a later filing under the Act. The Registration Statement and
the Prospectus and any amendments or supplements thereto contains or will
contain, as the case may be, all information which is required to be stated
therein by, and in all material respects conform or will conform, as the
case may be, to the requirements of, the Act and the Rules and Regulations.
Neither the Registration Statement nor any amendment thereto, as of the
applicable effective date, and neither the Prospectus nor any supplement
thereto contains or will contain, as the case may be, any untrue statement
of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, with respect to this clause (ii) that the
Company makes no representation or warranty as to information contained in
or omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Underwriters
specifically for use in the preparation thereof.
(iii) The filing of the Registration Statement and the execution and
delivery of this Underwriting Agreement have been duly authorized by the
Board of Directors of the Company; this Underwriting Agreement constitutes
a valid and legally binding obligation of the Company enforceable in
accordance with its terms (except to the extent the enforceability of the
indemnification and contribution provisions of Section 7 hereof may be
limited by public policy considerations as expressed in the Act as
construed by courts of competent jurisdiction and subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the enforcement of
creditors' rights generally); the issue and sale of the Shares by the
Company and the performance of this Underwriting Agreement and the
consummation of the transactions herein contemplated by the Company will
not result in a violation of the certificate of incorporation or bylaws of
the Company or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or its subsidiary under any statute, or under any indenture,
mortgage, deed of trust, sale and leaseback arrangement, material note or
3
<PAGE>
loan agreement or any other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they are bound or
to which any of the properties or assets of the Company or its subsidiary is
subject, or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or its subsidiaries or
their properties, except to such extent as does not materially adversely
affect the business, operations or financial condition of the Company and
its subsidiary, taken as a whole; no consent, approval, authorization,
order, registration or qualification of or with any court or governmental
agency or body is required for the consummation of the transactions herein
contemplated, except such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), the Nasdaq Stock Market ("Nasdaq") or
under the Act or Rules and Regulations or any state securities laws.
(iv) Except as described in the Prospectus, the Company has not sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree.
Except as described or contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not incurred any material
liabilities or material obligations, direct or contingent, other than in the
ordinary course of business, or entered into any material transactions not
in the ordinary course of business, and there has not been any material
change in the capital stock or long-term debt of the Company or any material
adverse change in the condition (financial or other), net worth, business,
management, prospects or results of operations of the Company and its
subsidiaries taken as a whole. The Company has filed all necessary federal,
state and foreign income and franchise tax returns and paid all taxes shown
as due thereon, other than taxes the payment of which is being disputed in
good faith; all tax liabilities are adequately provided for on the books of
the Company except to such extent as would not materially adversely affect
the business of the Company; the Company has made all necessary payroll tax
payments and is current and up-to-date as of the date of this Underwriting
Agreement; and the Company has no knowledge of any tax proceeding or action
pending or threatened against the Company or its subsidiaries which might
materially adversely affect their business or property.
(v) Except as described in the Prospectus, there is not now pending or, to
the knowledge of the Company, threatened or contemplated, any action, suit
or proceeding to which the Company is a party before or by any court or
public, regulatory or governmental agency or body which individually or in
the aggregate might be expected to result in any material adverse effect on
the business, financial condition or results of operation of the Company and
its subsidiary, taken as a whole; and there are no contracts or documents of
the Company which would be required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which have
not been filed as exhibits to the Registration Statement.
(vi) The Company has duly and validly authorized capital stock as
described in the Prospectus; all outstanding shares of Common Stock of the
Company and the Shares conform, or when issued will conform, to the
description thereof in the Registration Statement and the Prospectus and
have been, or, when issued and paid for as contemplated herein and in the
Registration Statement will be, duly authorized, validly issued, fully paid
and nonassessable; the issuance of the Shares to be purchased from the
Company hereunder is not subject to any preemptive or similar rights; and
all shares of Common Stock have been issued in compliance with federal and
state securities laws. Except as set forth in the Prospectus, the Company
does not have outstanding, and at the Closing Date, will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts, or
commitments to issue or sell any shares of Common Stock or any such
warrants, convertible securities or obligations. There are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the
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Act, except as otherwise previously disclosed by the Company in writing to
the Representatives with respect to the Registration Statement on Form S-3
filed with the Commission on June 3, 1996 or any registration statement
filed or contemplated to be filed in connection with the Company's stock
option plans.
(vii) At the Closing Date, the only active subsidiary (as defined in the
Rules and Regulations) of the Company will be SED International, Inc. The
Company has been and its subsidiary at the Closing Date will have been duly
incorporated and are validly existing as corporations in good standing
under the laws of the states or other jurisdictions in which they are
incorporated, with full power and authority (corporate and other) to own,
lease and operate their properties and conduct their businesses as
described in the Registration Statement; the Company is and its subsidiary
at the Closing Date will be duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction in which
their ownership or leasing of property or conduct of business legally
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the ability of the Company and
its subsidiary to conduct its or their business as described in the
Registration Statement; at the Closing Date the outstanding shares of
capital stock of the Company's subsidiary will have been duly authorized
and validly issued, are fully paid and nonassessable and will be owned by
the Company free and clear of any mortgage, pledge, lien, encumbrance,
charge or adverse claim and will not be the subject of any agreement or
understanding with any person, other than any lien, claim, or encumbrance
arising by virtue of the Amended and Restated Credit Agreement dated as of
August 13, 1997 among the Company and SED International, Inc., as
Borrowers, and Wachovia Bank, N.A. and National City Bank of Columbus, as
amended (the "Credit Agreement"); and at the Closing Date, no options,
warrants or other rights to purchase, agreement or other obligations to
issue or other rights to convert any obligations into shares of capital
stock or ownership interests in the subsidiary will be outstanding.
(viii) Deloitte & Touche LLP, the accounting firm which has certified the
financial statements filed with the Commission as a part of the
Registration Statement, is an independent public accounting firm within the
meaning of the Act and the Rules and Regulations.
(ix) The financial statements and schedules of the Company, including the
notes thereto and schedules incorporated by reference therein, filed with
and as a part of the Registration Statement, are accurate in all material
respects and present fairly the consolidated financial position of the
Company and its subsidiary reflected therein as of the respective dates
thereof and the results of operations of the Company and its subsidiary at
the respective dates and for the respective periods covered thereby, all
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved except as
otherwise disclosed in the Prospectus. The selected and summary financial
and statistical data included in the Registration Statement and Prospectus
present fairly in all material respects the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements in the Registration Statement and Prospectus.
(x) The Company is not now and at the Closing Date will not be in default
with respect to any contract or agreement to which it is a party, including
the Credit Agreement; provided that this representation shall not apply to
defaults which in the aggregate are not materially adverse to the financial
condition or the business or prospects of the Company.
(xi) The Company is not now and at the Closing Date will not be in
violation of any other laws, ordinances or governmental rules or
regulations to which it is subject, and the Company has not failed to
obtain any other license, permit, franchise, easement, consent, or other
governmental authorization necessary to the ownership, leasing and
operation of its properties or to the conduct of its business, which
violation or failure would materially adversely affect the business,
operations, properties, prospects, profits or financial condition of the
Company and its subsidiary, taken as a whole. The Company has not at any
time during the past five years, (A) made any unlawful contributions to any
candidate for any political
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office, or failed fully to disclose any contribution in violation of law,
or (B) made any payment to any state, federal or foreign government
official, or other person charged with similar public or quasi-public duty
(other than payment required or permitted by applicable law).
(xii) Except as described in the Prospectus, the Company owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to conduct
the business now operated by it, and the Company has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
conduct of the business, operations, or financial condition of the Company.
(xiii) Except as described in the Prospectus and the Registration
Statement, the Company has good and marketable title to all property owned
by it, free and clear of all liens, encumbrances, restrictions and defects
except such as would not have a material adverse effect on the business,
financial condition or results of operations of the Company on a
consolidated basis and any liens or encumbrances by vendors of inventory;
and any property held under lease or sublease by the Company is held under
valid, subsisting and enforceable leases or subleases with such exceptions
as are not material and do not interfere with the use made and proposed to
be made of such property by the Company, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating to
or affecting the enforcement of creditors' rights generally, and the
Company has no notice or knowledge of any material claim of any sort which
has been, or may be, asserted by anyone adverse to the Company's rights as
lessee or sublessee under any lease or sublease described above, or
affecting or questioning the Company's rights to the continued possession
of the leased or subleased premises under any such lease or sublease in
conflict with the terms thereof.
(xiv) Except as described in the Prospectus, there is no factual basis
for any action, suit or other proceeding involving the Company or any of
its material assets for any failure by the Company to comply with any
requirements of federal, state or local regulation relating to air, water,
solid waste management, hazardous or toxic substances, or the protection of
health or the environment, other than any failure which would not have a
material adverse effect on the business or financial condition of the
Company and its subsidiary, taken as a whole. Except as described in the
Prospectus, none of the property owned or leased by the Company is, to the
best knowledge of the Company, contaminated with any waste or hazardous
substances, and the Company may not be deemed an "owner or operator" of a
"facility" or "vessel" which owns, possesses, transports, generates or
disposes of a "hazardous substance" as those terms are defined in (S)9601
of the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. (S)9601 et seq.
(xv) No labor disturbance exists with the employees of the Company or is
imminent which would have a material adverse effect on the Company.
(xvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the
Company's Common Stock, and the Company is not aware of any such action
taken or to be taken by affiliates of the Company, other than as disclosed
in the Prospectus and Registration Statement.
(xvii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xviii) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that is not described or filed as
required. All such contracts to which the Company is a party have been duly
authorized, executed and delivered by the Company, constitute valid and
binding agreements of the Company and are enforceable
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against the Company in accordance with the terms thereof, subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws relating to or affecting the enforcement of creditors' rights
generally.
(xix) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(xx) Other than as contemplated by this Underwriting Agreement, there is
no broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or other fee or commission as a
result of the offering of Firm Shares or Option Shares as contemplated by
this Underwriting Agreement.
(xxi) The Company has timely filed all required forms, reports and other
documents with the Commission necessary to meet the requirements of Form S-
3, all of which complied, when filed, in all material respects, with all
applicable requirements of the Act and the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations of the
Commission under the Exchange Act. As of their respective dates, such
reports, forms and other documents (including all exhibits and schedules
thereto) and documents incorporated by reference therein (the "Reports"),
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Company has been advised by counsel to the
Representatives that they have received a complete copy of all such
Reports. The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied or will comply with the requirements of the
Exchange Act and the rules and regulations under the Exchange Act, and,
when read together with the other information in the Prospectus, at the
time the Registration Statement and any amendments thereto become effective
and at the Closing Date, will not contain an untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included or incorporated by reference in such Reports were prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may otherwise be
indicated in the notes thereto), and fairly present the financial position
of the Company as of the date thereof and the consolidated results of its
operations and consolidated changes in financial position for the periods
then ended (subject, in the case of any unaudited interim financial
statements, to year-end adjustments).
(b) Any certificate signed by any officer of the Company and delivered to
you or to counsel for the Underwriters at Closing shall be deemed a
representation and warranty to each Underwriter as to the matters covered
thereby.
5. ADDITIONAL COVENANTS. The Company covenants and agrees with the several
Underwriters that:
(a) If the Registration Statement is not effective under the Act, the
Company will use its best efforts to cause the Registration Statement to
become effective as promptly as possible, and it will notify you, promptly
after it shall receive notice thereof, of the time when the Registration
Statement has become effective. The Company (i) will prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations, if
required, a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise or a Term Sheet or Abbreviated Term Sheet,
as applicable; (ii) will not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Underwriters shall not previously
have been advised and furnished with a copy or to which the Underwriters shall
have reasonably objected in writing or which is not in compliance with the
Rules and Regulations; and (iii) will promptly notify you after it shall have
received notice thereof of the time when any amendment to the Registration
Statement becomes effective or when any supplement to the Prospectus has been
filed.
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(b) The Company will advise the Underwriters promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the Commission
for amendment of the Registration Statement or for supplement to the
Prospectus or for any additional information, or of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus or of the institution or threatening of
any proceedings for that purpose, and the Company will use its reasonable best
efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(c) The Company will cooperate with the Underwriters and their counsel in
endeavoring to qualify the Shares for sale under the securities laws of such
United States jurisdictions as they may have designated and will make such
applications, file such documents, and furnish such information as may be
necessary for that purpose, provided the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent or to subject itself to taxation as doing business in any
jurisdiction where it is not now so taxed. The Company will, from time to
time, file such statements, reports, and other documents, as are or may be
required to continue such qualifications in effect for so long a period as the
Underwriters may reasonably request.
(d) The Company will deliver to, or upon the order of, the Underwriters,
without charge from time to time, as many copies of any Preliminary Prospectus
as they may reasonably request. The Company will deliver to, or upon the order
of, the Underwriters without charge as many copies of the Prospectus, as it
thereafter may be amended or supplemented, as they may from time to time
reasonably request; provided, however, that the expense of the preparation and
delivery of any Prospectus required for use after the expiration of the time
period required by law for delivery by an Underwriter or dealer shall be borne
by the Underwriters required to deliver such Prospectus. The Company consents
to the use of such Prospectus by the Underwriters and by all dealers to whom
the Shares may be sold, both in connection with the offering or sale of the
Shares and for such other purposes and for such period of time thereafter as
the Prospectus is required by law to be delivered in connection with the
offering or sale of the Shares. The Company will deliver to the
Representatives at or before the Closing Date two signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Underwriters such number of copies of the
Registration Statement, without exhibits, and of all amendments thereto, as
they may reasonably request.
(e) If, during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in your judgment or in the opinion of
counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to include statements required to be stated therein or
make the statements therein, in light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, not misleading in any
material respect, the Company promptly will prepare and file with the
Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, omit a required statement or be misleading in any material respect;
provided, however, that the expense of the preparation and delivery of any
Prospectus required for use after the expiration of the time period required
by law for delivery by an Underwriter or dealer, as well as the expense of the
preparation and filing of an amendment to the Registration Statement relating
to such Prospectus, shall be borne by the Underwriters required to deliver
such Prospectus.
(f) The Company will make generally available to its stockholders and will
file as an exhibit in a report pursuant to the Securities and Exchange Act of
1934, as amended (the "1934 Act"), as soon as it is practicable to do so, but
in any event not later than 90 days after the end of the period covered
thereby, an earnings statement in reasonable detail, covering a period of at
least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise the Underwriters in writing when such statement
has been so made available.
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(g) The Company will, for a period of five years from the Closing Date,
promptly deliver to the Representatives at their principal executive offices a
reasonable number of copies of annual reports, quarterly reports, current
reports and copies of all other documents, reports and information furnished
by the Company to its stockholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant
to the Act or the 1934 Act. The Company will deliver to the Representatives
similar reports with respect to any significant subsidiaries, as that term is
defined in the Rules and Regulations, which are not consolidated in the
Company's financial statements. Any report, document or other information
required to be furnished under this paragraph (g) shall be furnished as soon
as practicable after such report, document or information becomes publicly
available.
(h) The Company will apply the proceeds from the sale of the Shares as set
forth in the description under "Use of Proceeds" in the Prospectus.
(i) The Company will supply you with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Act.
(j) Prior to the Closing Date (and, if applicable, the Option Closing Date),
the Company will furnish to you, as soon as they have been prepared, copies of
any unaudited interim consolidated financial statements of the Company and its
subsidiary for any periods subsequent to the periods covered by the financial
statements appearing in the Registration Statement and the Prospectus.
(k) Prior to the Closing Date (and, if applicable, the Option Closing Date),
the Company will not issue any press releases or other communications directly
or indirectly and will hold no press conferences with respect to the Company
or any of its subsidiaries, the financial condition, results of operations,
business, properties, assets or liabilities of the Company or any of its
subsidiaries, or the offering of the Shares, without your prior consent,
evidenced in writing or by facsimile transmission.
(l) For a period of three years following Closing, the Company will use its
reasonable best efforts to maintain the quotation of the Shares on the Nasdaq
National Market or a national securities exchange.
(m) Except pursuant to this Underwriting Agreement or with the prior written
consent of A.G. Edwards & Sons, Inc., the Company will not, and the Company
has provided agreements executed by each of the Company's officers and
directors and each record or beneficial owner of more than five percent (5%)
(other than FMR Corp. and Paradigm Capital Management, Inc.) of the shares of
Company's Common Stock providing that none of them will, for a period of 90
days (the "Lock-Up Period") from the Effective Date, offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock; provided, however, that nothing
contained herein shall prohibit the exercise of stock options or other
purchases of Common Stock under stock option plans or other incentive
compensation arrangements for employees or directors previously approved by
the Company's Board of Directors; and, provided further, that the undersigned
may give or pledge any such securities without the prior written consent of
A.G. Edwards & Sons, Inc. if the donee or pledgee, as the case may be, agrees
in writing prior to such gift or pledge to be bound by all the terms of this
agreement and such writing is delivered to A.G. Edwards & Sons, Inc. within
five days after said gift or pledge. In addition, the Company may issue shares
of Common Stock, securities convertible into, exercisable or exchangeable for,
or any other rights to receive shares of Common Stock issued as full or
partial consideration for the acquisition of interests in business entities in
connection with the expansion of the Company's business, provided, however,
that the holders of any such shares shall not be granted the right to require
registration of such shares and shall not be permitted to sell such shares
prior to the expiration of the Lock-Up Period without the prior written
consent of A.G. Edwards & Sons, Inc.
(n) The Company and its subsidiary will maintain and keep accurate books and
records reflecting their assets and maintain internal accounting controls
which provide reasonable assurance that (1) transactions are executed in
accordance with management's authorization, (2) transactions are recorded as
necessary to permit
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the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company and its subsidiary, (3)
access to the assets of the Company and its subsidiary is permitted only in
accordance with management's authorization, and (4) the recorded
accountability for assets of the Company and its subsidiary are compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any difference.
(o) If at any time during the 25 day period after the Registration Statement
is declared 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 for the Shares 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, after written
notice from you advising it as to the effect set forth above, prepare, consult
with you concerning the substance of and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or commenting
on such rumor, publication or event.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase and pay for the Shares, as provided herein, shall be
subject to the accuracy in all material respects, as of the date hereof and as
of the Closing Date (and, if applicable, the Option Closing Date), of the
representations and warranties of the Company contained herein, to the
performance in all material respects by the Company of its covenants and
obligations hereunder, and to the following additional conditions:
(a) All filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made. No stop order suspending the effectiveness
of the Registration Statement, as amended from time to time, shall have been
issued and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened or contemplated by the
Commission, and any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the
Underwriters.
(b) No Underwriter shall have disclosed in writing to the Company on or
prior to the Closing Date (and, if applicable, the Option Closing Date), that
the Registration Statement or Prospectus or any amendment or supplement
thereto contains an untrue statement of fact which, in the opinion of counsel
to the Underwriters, is material, or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or
is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and which is not corrected by the
Company within a reasonable time prior to Closing after notice thereto is
given.
(c) On the Closing Date (and, if applicable, the Option Closing Date), you
shall have received the opinion letter of counsel for the Company, addressed
to you and dated the Closing Date (and, if applicable, the Option Closing
Date), to the effect that:
(i) The Company and its subsidiary are corporations validly existing in
good standing under the laws of the states or other jurisdictions in which
they are incorporated, with corporate power and authority to own, lease and
operate their properties and conduct their business as described in the
Registration Statement; the Company and its subsidiary are duly qualified
to do business as foreign corporations in good standing in each state or
other jurisdiction where the Company and its subsidiary each has indicated
to such counsel that each is conducting business other than each such
jurisdiction where the failure to be so qualified would not have a material
adverse effect on the ability of the Company and its subsidiary to conduct
its or their business as described in the Registration Statement; and the
outstanding shares of capital stock of the Company's subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable; to
the knowledge of such counsel, no options, warrants or other rights to
purchase, agreement or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests
in the subsidiary are outstanding.
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(ii) The Company has duly and validly authorized capital stock as set
forth under the heading "Capitalization" in the Prospectus as of the dates
stated therein; all outstanding shares of Common Stock of the Company and
the Shares conform to the description thereof in the Prospectus under the
heading "Description of Capital Stock"; the Shares to be sold by the
Company have been duly authorized and, when delivered and paid for in
accordance with this Underwriting Agreement, will be validly issued, fully
paid and non-assessable, and to the knowledge of such counsel the
stockholders of the Company have no preemptive rights under the Delaware
General Corporation Law or the Company's Certificate of Incorporation, as
amended, with respect to the Shares.
(iii) Such counsel has been advised by the staff of the Commission that
the Registration Statement has become effective under the Act and, to the
knowledge of such counsel after telephonic inquiry on the Closing Date
(and, if applicable, the Option Closing Date), no stop order suspending the
effectiveness of the Registration Statement has been issued and counsel has
no notice that any proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
(iv) The Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue date, comply
as to form in all material respects with the requirements of the Act and
the applicable rules and regulations (except that such counsel need express
no opinion as to the financial statements or other financial or statistical
data or schedules included or incorporated by reference therein).
(v) To the knowledge of such counsel, no authorization, approval,
consent, order, registration or qualification of or with any court or
governmental body, authority or agency is required with respect to the
Company in connection with the transactions contemplated by this
Underwriting Agreement, except such as may be required under the Act or the
Rules and Regulations or by Nasdaq or the NASD or under state securities
laws in connection with the purchase and distribution of the Shares by the
Underwriters (such counsel may exclude from its opinion letters matters
arising out of the requirements of the NASD and state securities laws).
(vi) The filing of the Registration Statement has been duly authorized by
the Board of Directors of the Company. The performance of this Underwriting
Agreement and the consummation of the transactions herein contemplated
other than the performance of the Company's indemnification obligations
hereunder concerning which no opinion is expressed) will not result in a
violation of the Company's certificate of incorporation or bylaws or, to
the knowledge of such counsel, result in a breach or violation of any of
the terms and provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
material properties or assets of the Company and its subsidiary under,
Georgia law, the Delaware General Corporation Law, or any United States
federal statute, or under any indenture, mortgage, deed of trust, sale and
leaseback arrangement, material note or loan agreement or any other
material agreement or instrument known to such counsel to which the Company
or its subsidiary is a party or by which they are bound or to which any of
the properties or assets of the Company or its subsidiary are subject, or
any order, rule or regulation known to such counsel of any court or
governmental agency or body in the United States having jurisdiction over
the Company or its subsidiary or their properties, except, in the case of
any such violation, breach, default, creation or imposition, to such extent
as does not materially adversely affect the business, operations or
financial condition of the Company and its subsidiary taken as a whole.
(vii) To the knowledge of such counsel, (A) there are no material
(individually, or in the aggregate) legal, governmental or regulatory
proceedings pending or threatened to which the Company or any subsidiary is
a party or of which the business or properties of the Company or any
subsidiary is the subject which are not disclosed or incorporated by
reference in the Registration Statement and Prospectus; and (B) there are
no contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which are not described or filed as required.
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(viii) The statements made in the Prospectus under the caption
"Description of Capital Stock", to the extent that they constitute matters
of law under the Delaware General Corporation Law or legal conclusions,
when read in conjunction with other information contained in the
Prospectus, have been reviewed by such counsel and fairly summarize in all
material respects the information therein described as of their respective
dates, provided such counsel may rely on representations of officers of the
Company with respect to the factual matters contained in such statements.
(ix) The Company is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(x) There are no contracts, agreements or understandings known to such
counsel between the Company and any person granting such person the right
to require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act, except with respect to the Registration
Statement on Form S-3 filed with the Commission on June 3, 1996 or any
registration statement filed or contemplated to be filed in connection with
the Company's stock option plans or agreements.
(xi) This Underwriting Agreement has been duly authorized, executed and
delivered by the Company, and assuming due authorization, execution and
delivery by you, constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except (A) as such enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws now or hereafter in effect relating to
creditors' rights or debtors' obligations generally; (B) that the remedies
of specific performance and injunctive and other forms of relief are
subject to general equitable principles, whether enforcement is sought at
law or in equity, and that such enforcement may be subject to the
discretion of the court before which any proceedings therefor may be
brought; and (C) as rights to indemnity and contribution may be limited by
state or Federal laws relating to securities or the policies underlying
such laws.
Such counsel shall confirm that, although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, in the course of its duties in connection with the preparation of
the Registration Statement and Prospectus, nothing came to such counsel's
attention that would lead them to believe that at the time the Registration
Statement became effective and at the Closing Date and, if applicable, the
Option Closing Date, either the Registration Statement or Prospectus or any
amendment or supplement thereto (other than the financial statements or other
financial or statistical data and supporting schedules as to which such
counsel expresses no view) contained any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
In rendering the foregoing opinion, such counsel may rely, provided that the
opinion shall state that you and they are entitled to so rely, as to all
matters of fact, upon certificates and written statements of the executive
officers of, and accountants for, the Company and various public officials.
Such opinion shall be provided in accordance with the 1992 Interpretive
Standards for Legal Opinions in Georgia, as amended.
(d) You shall have received on the Closing Date (and, if applicable, the
Option Closing Date), from Nelson Mullins Riley & Scarborough, L.L.P., counsel
to the Underwriters, such opinion or opinions, dated the Closing Date (and, if
applicable, the Option Closing Date) with respect to the incorporation of the
Company, the validity of the Shares, the Registration Statement, the
Prospectus and other related matters as you may reasonably require; the
Company shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass on such matters.
12
<PAGE>
(e) You shall have received at or prior to the Closing Date from Nelson
Mullins Riley & Scarborough, L.L.P., a memorandum or memoranda, in form and
substance satisfactory to you, with respect to the qualification for offering
and sale by the Underwriters of the Shares under state securities or Blue Sky
laws of such jurisdictions as the Underwriters may have designated to the
Company.
(f) Prior to the time of delivery of this Underwriting Agreement and on the
Closing Date (and, if applicable, the Option Closing Date), you shall have
received from Deloitte & Touche LLP, a letter or letters, dated the date of
this Underwriting Agreement and the Closing Date (and, if applicable, the
Option Closing Date), respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to the
Company within the meaning of the Act and the published Rules and Regulations,
and the answer to Item 509 of Regulation S-K set forth in the Registration
Statement is correct insofar as it relates to them, and stating to the effect
set forth in Schedule II hereto.
(g) Except as contemplated in the Prospectus, (i) neither the Company nor
its subsidiary shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus,
neither the Company nor its subsidiary shall have incurred any liability or
obligation, other than in the ordinary course of business, direct or
contingent, or entered into transactions other than in the ordinary course of
business, and there shall not have been any change in the capital stock or
long-term debt of the Company or its subsidiary, other than in the ordinary
course of business, or any change in the financial condition, net worth,
business, management, prospects or results of operations of the Company and
its subsidiary, taken as a whole, the effect of which, in any such case
described in clause (i) or (ii), is in your judgment so material or adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares being delivered on such Closing Date (and, if
applicable, the Option Closing Date) on the terms and in the manner
contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or the establishing on such exchanges
by the Commission or by such exchanges of minimum or maximum prices which are
in force and effect on the date hereof; (ii) a general moratorium on
commercial banking activities declared by either federal or state authorities;
(iii) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (h) in your judgment makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus; (iv) any
calamity or crisis, change in national, international or world affairs, act of
God, change in the international or domestic markets, or change in the
existing financial, political or economic conditions in the United States or
elsewhere, if the effect of any such event specified in this clause (h) makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus; or (v)
the enactment, publication, decree, or other promulgation of any federal or
state statute, regulation, rule, or order of any court or other governmental
authority, or the taking of any action by any federal, state or local
government or agency in respect of fiscal or monetary affairs, if the effect
of any such event specified in this clause (h) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus.
(i) You shall have received certificates, dated the Closing Date (and, if
applicable, the Option Closing Date) and signed by the President and the Chief
Financial Officer of the Company stating that (i) they have carefully examined
the Registration Statement and the Prospectus as amended or supplemented and
nothing has come to their attention that would lead them to believe that
either the Registration Statement or the Prospectus, or any amendment or
supplement thereto as of their respective effective or issue dates, contained,
and the Prospectus as amended or supplemented at such Closing Date contains,
any untrue statement of a material fact, or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and, that (ii) all representations and
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<PAGE>
warranties made herein by the Company are true and correct in all material
respects at such Closing Date, with the same effect as if made on and as of
such Closing Date, and all agreements herein to be performed by the Company on
or prior to such Closing Date have been duly performed in all material
respects.
(j) The Company shall not have failed, refused, or been unable, at or prior
to the Closing Date (and, if applicable, the Option Closing Date) to have
performed in all material respects any agreement on its part to be performed
or any of the conditions herein contained and required to be performed or
satisfied by it at or prior to such Closing Date.
(k) The Company shall have furnished to you at the Closing Date (and, if
applicable, the Option Closing Date) such other certificates as you may have
reasonably requested as to the accuracy, in all material respects, on and as
of such Closing Date, of the representations and warranties of the Company
herein and as to the performance, in all material respects, by the Company of
its obligations hereunder.
(l) The Shares shall have been duly authorized for trading and all of the
shares have been approved for listing upon official notice of issuance on the
Nasdaq/NMS.
(m) The agreements mentioned in Section 5(m) shall be in full force and
effect.
All such opinions, certificates, letters and documents will be in compliance
with the provisions hereof only if they are reasonably satisfactory to you and
to Nelson Mullins Riley & Scarborough, L.L.P., counsel for the several
Underwriters. The Company will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you may request.
If any of the conditions specified above in this Section 6 shall not have
been satisfied at or prior to the Closing Date (and, if applicable, the Option
Closing Date) or waived by you in writing, this Underwriting Agreement may be
terminated by you on notice to the Company.
7. INDEMNIFICATION. (a) The Company will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
the Act, against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter or such controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any blue sky application or other
document executed by the Company or based on any information furnished in
writing by the Company, filed in any jurisdiction in order to qualify any or
all of the Shares under the securities laws thereof ("Blue Sky Application"),
or arise out of or are based upon the omission or alleged omission therein of
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; and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating 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 or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, or such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you, specifically for use in the preparation thereof; and
provided, further, that if any Preliminary Prospectus or the Prospectus
contained any alleged untrue statement or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading and such statement or omission shall have
been corrected in a revised Preliminary Prospectus or in the Prospectus or in
an amended or supplemented Prospectus, the Company shall not be liable to any
Underwriter or controlling person under this subsection (a) with respect to
such alleged untrue statement or alleged omission to the extent that any such
loss, claim, damage or liability of such Underwriter or controlling person
results from
14
<PAGE>
the fact that such Underwriter sold Shares to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, such
revised Preliminary Prospectus or Prospectus or amended or supplemented
Prospectus. This indemnity agreement shall be in addition to any liabilities
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission therein
of 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, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by any such Underwriter specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. The Company acknowledges that the statements set forth under the
headings "Underwriting" and "Business-Industry" in any Preliminary Prospectus
and the Prospectus constitute the only information relating to the
Underwriters furnished in writing to the Company by the Underwriters expressly
for inclusion in the Registration Statement, any Preliminary Prospectus or the
Prospectus.
(c) Any person (as defined in the Act) which proposes to assert the right to
be indemnified under this Section 7 shall, within ten days after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party under
this Section 7, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served, but
the omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve such indemnifying party from any liability which
it may have to any indemnified party otherwise than under this Section 7. In
case any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party, similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its own counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party at the expense of the
indemnifying party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by such counsel in a written opinion
that there may be a conflict of interest between the indemnifying party and
the indemnified party in the conduct of the defense, or certain aspects of the
defense, of such action (in which case the indemnifying party shall not have
the right to direct the defense of such action with respect to those matters
or aspects of the defense on which a conflict exists or may exist on behalf of
the indemnified party) or (iii) the indemnifying party shall not in fact have
employed counsel to assume the defense of such action, in any of which events
such reasonable fees and expenses to the extent applicable shall be borne by
the indemnifying party. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its prior written consent.
Notwithstanding the foregoing, the indemnifying party shall not be liable for
the reasonable fees and expenses of more than one separate counsel for all
indemnified parties. Each indemnified party, as a condition of such indemnity,
shall cooperate in good faith with the indemnifying party in the defense of
any such action or claim.
15
<PAGE>
(d) If the indemnification provided for in this Section 7 is for any reason,
other than pursuant to the terms thereof, 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 to appeal) to be
unavailable to an indemnified party under subsections (a), (b) or (c) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault, as
applicable, of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as other relevant
equitable considerations. The relative benefits received by, as applicable,
the Company and the Underwriters shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue statement
of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations,
warranties, and agreements of the Company contained in Sections 7 and 11
herein or in certificates delivered pursuant hereto, and the agreements of the
Underwriters contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any termination or cancellation of this
Underwriting Agreement or any investigation made by or on behalf of any
Underwriter, the Company or other indemnified party and shall survive delivery
of the Shares to the Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter shall default in its
obligation to purchase the Shares which it has agreed to purchase hereunder,
you may in your discretion arrange for you or another party r other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of thirty-
six hours within which to procure another party or parties reasonably
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that
it has so arranged for the purchase of such Shares, you or the Company shall
have the right to postpone the Closing Date for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Underwriting Agreement
shall include
16
<PAGE>
any persons substituted under this Section 9 with like effect as if such
person had originally been a party to this Underwriting Agreement with respect
to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company
as provided in subsection (a) above, the aggregate number of Shares which
remains unpurchased does not exceed one-tenth of the total Shares to be sold
on the Closing Date, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the Shares which such Underwriter
agreed to purchase hereunder and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares
which such Underwriter agreed to purchase hereunder) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company
as provided in subsection (a) above, the number of Shares which remains
unpurchased exceeds one-tenth of the total Shares to be sold on the Closing
Date, or if the Company shall not exercise the right described in subsection
(b) above to require the non-defaulting Underwriters to purchase Shares of the
defaulting Underwriter or Underwriters, then this Underwriting Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company except for the expenses to be borne by the Company
and the Underwriters as provided in Section 11 hereof and the indemnity and
contribution agreements in Section 7 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
10. EFFECTIVE DATE AND TERMINATION. This Underwriting Agreement shall become
effective at 8:30 a.m., Atlanta time, on the first business day following the
effective date of the Registration Statement, or at such earlier time after
the effective date of the Registration Statement as you in your discretion
shall first release the Shares for offering to the public; provided, however,
that the provisions of Section 7 and 11 shall at all times be effective. For
the purposes of this Section 10(a), the Shares shall be deemed to have been
released to the public upon release by you of the publication of a newspaper
advertisement relating to the Shares or upon release of telegrams, facsimile
transmissions or letters offering the Shares for sale to securities dealers,
whichever shall first occur.
(b) In the event that the Company refuses or fails to perform hereunder,
this Underwriting Agreement may be terminated by you at any time before it
becomes effective in accordance with Section 10(a) by notice to the Company;
provided, however, that the provisions of this Section 10 and of Section 7 and
Section 11 hereof shall at all times be effective. In the event of any
termination of this Underwriting Agreement pursuant to Section 9 or this
Section 10(b) hereof, the Company shall not then be under any liability to any
Underwriter except as provided in Section 7 or Section 11 hereof.
(c) This Underwriting Agreement may be terminated by you at any time at or
prior to the Closing Date by notice to the Company if any condition specified
in Section 6 hereof shall not have been satisfied on or prior to the Closing
Date. Any such termination shall be without liability of any party to any
other party except as provided in Sections 7 and 11 hereof.
(d) This Underwriting Agreement also may be terminated by you, by notice to
the Company as to any obligation of the Underwriters to purchase the Option
Shares, if any condition specified in Section 6 hereof shall not have been
satisfied at or prior to the Option Closing Date or as provided in Section 9
of this Underwriting Agreement.
If you terminate this Underwriting Agreement as provided in Sections 10(b),
10(c) or 10(d), you shall notify the Chief Executive Officer of the Company by
telephone or telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company will bear and pay the costs and expenses
incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of
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<PAGE>
the Company's accountants and the fees and expenses of counsel for the
Company, (b) the preparation, printing, filing, delivery and shipping of the
Registration Statement, each Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto (except as otherwise expressly provided in
Section 5(d) or (e) hereof) and the printing, delivery and shipping of this
Underwriting Agreement, the Agreement Among Underwriters, the Selected Dealer
Agreement, Underwriters' Questionnaires and Powers of Attorney and Blue Sky
Memoranda, (c) the furnishing of copies of such documents (except as otherwise
expressly provided in Section 5(d) or (e) hereof) to the Underwriters, (d) the
registration or qualification of the Shares for offering and sale under the
securities laws of the various states, including the reasonable fees and
disbursements of Underwriters' counsel relating to such registration or
qualification, (e) the fees payable to the NASD and the Commission in
connection with their review of the proposed offering of the Shares, (f) all
printing and engraving costs related to preparation of the certificates for
the Shares, including transfer agent and registrar fees, (g) all initial
transfer taxes, if any, (h) all fees and expenses relating to the inclusion of
the Shares for trading on Nasdaq/NMS, (i) all travel expenses, including air
fare and accommodation expenses, of representatives of the Company in
connection with the offering of the Shares and (j) all of the other costs and
expenses incident to the performance by the Company of the registration and
offering of the Shares; provided, however, that the Underwriters will bear and
pay the fees and expenses of the Underwriters' counsel (other than fees and
disbursements relating to the registration or qualification of the Shares for
offering and sale under the securities laws of the various states and
clearance with the NASD), the Underwriters' out-of-pocket and travel expenses,
and any advertising costs and expenses incurred by the Underwriters incident
to the public offering of the Shares.
If this Underwriting Agreement is terminated by you in accordance with the
provisions of Section 10(b) or 10(c) (other than as a result of the failure to
receive the items described in Section 6(d) or 6(e) or the occurrence of any
events in Section 6(h), the Company shall reimburse the Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel to the Underwriters.
12. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o A.G. Edwards & Sons, Inc. at One North Jefferson
Avenue, St. Louis, Missouri 63103, Attention: Syndicate, facsimile number
(314) 289-7387, or if sent to the Company shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to the Company at 4916
North Royal Atlanta Drive, Tucker, Georgia 30085, facsimile number (770) 938-
2814. Notice to any Underwriter pursuant to Section 7 shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to
such Underwriter's address as it appears in the Underwriters' Questionnaire
furnished in connection with the offering of the Shares or as otherwise
furnished to the Company.
13. PARTIES. This Underwriting Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors and assigns. Nothing expressed or mentioned in this Underwriting
Agreement is intended or shall be construed to give any person, corporation or
other entity, other than the parties hereto and their respective successors
and assigns and the officers, directors and other persons referred to in
Section 7, any legal or equitable right, remedy or claim under or in respect
of this Underwriting Agreement or any provision herein contained; this
Underwriting 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 successors and assigns and said officers, directors and other
persons, and for the benefit of no other person, corporation or other entity.
No purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Underwriting Agreement you shall
act on behalf of each of the several Underwriters. The Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of the Underwriters, made or given by you on behalf of the
Underwriters, as if the same shall have been made or given in writing by the
Underwriters.
14. COUNTERPARTS. This Underwriting Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
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<PAGE>
15. PRONOUNS. Whenever a pronoun of any gender or number is used herein, it
shall, where appropriate, be deemed to include any other gender and number.
16. APPLICABLE LAW. This Underwriting Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and the Underwriters.
SOUTHERN ELECTRONICS CORPORATION
By:
Title:
Accepted in St. Louis, Missouri as of the date first above written, on behalf
of ourselves and each of the several Underwriters named in Schedule I hereto.
A.G. EDWARDS & SONS, INC.
CLEARY GULL REILAND & MCDEVITT INC.
INTERSTATE/JOHNSON LANE CORPORATION
C.L. KING & ASSOCIATES, INC.
By: A.G. Edwards & Sons, Inc.
By: ______________________________
Title:
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ---- ---------
<S> <C>
A.G. Edwards & Sons, Inc..............................................
---------
Cleary Gull Reiland & McDevitt, Inc...................................
---------
Interstate/Johnson Lane Corporation...................................
---------
C.L. King & Associates, Inc...........................................
---------
Total 3,000,000
=========
</TABLE>
20
<PAGE>
SCHEDULE II
Pursuant to Section 6(f) of the Underwriting Agreement, Deloitte & Touche LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiary within the meaning of the Act and the applicable
Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, prospective
financial statements and/or pro forma financial information examined) by them
and included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the Act
and the applicable Rules and Regulations thereunder; and, if applicable, they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements derived
from audited financial statements of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have been
furnished to the Representatives of the Underwriters (the "Representatives").
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below,
performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial
Information, on the latest available interim financial statements of the
Company and its subsidiary, inspection of the minute books of the Company and
its subsidiary since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company and its
subsidiary responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the unaudited statements of
consolidated income, statements of consolidated financial position and
statements of consolidated cash flows included in the Prospectus for them to be
in conformity with generally accepted accounting principles, or, if applicable,
the unaudited statements of consolidated income, statements of consolidated
financial position and statements of consolidated cash flows included in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations thereunder.
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items were
derived, and any such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding amounts in the
audited consolidated financial statements included in the Prospectus.
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited financial statements
referred to in Clause (A) and any unaudited income statement data and balance
sheet items included in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus.
(D) any unaudited pro forma consolidated financial statements included in
the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those statements.
(E) as of a specified date not more than five days prior to the date of such
letter, there have been any changes in the consolidated capital stock or any
increase in the consolidated long-term debt of the Company and
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its subsidiary, or any decreases in consolidated working capital, net current
assets or net assets or other items specified by the Representatives, or any
changes in any items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such letter.
(F) for the period from the date of the latest financial statements included
in the Prospectus to the specified date referred to in Clause (E), there were
any decreases in consolidated net revenues or operating profit or the total or
per share amounts of consolidated net income or any other changes in any other
items specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each case for
changes, decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter.
(iv) In addition to the audit referred to in their report(s) included in the
Prospectus and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraph (iii) above, they have carried
out certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives, which
are derived from the general accounting records of the Company and its
subsidiary for the periods covered by their reports and any interim or other
periods since the latest period covered by their reports, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain of such
amounts, percentages and financial information with the accounting records of
the Company and its subsidiary and have found them to be in agreement.
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Southern Electronics
Corporation on Form S-3 of (i) our report dated August 13, 1997 included in
the Annual Report on Form 10-K of Southern Electronics Corporation for the
year ended June 30, 1997 and (ii) our report dated August 13, 1997 appearing
in the Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
September 19, 1997
