AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 1996
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KELLSTROM INDUSTRIES, INC.
(formerly known as Israel Tech Acquisition Corp.)
(Exact name of registrant as specified in its charter)
Delaware 13-3753725
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14000 N.W. 4th Street
Sunrise, Florida 33325
(954) 845-0427
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Zivi R. Nedivi
Chief Executive Officer
Kellstrom Industries, Inc.
14000 N.W. 4th Street
Sunrise, Florida 33325
(954) 845-0427
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert L. Winikoff, Esq. Michael Hirschberg, Esq.
Cooperman Levitt Winikoff Lester & Newman, P.C. Piper & Marbury L.L.P.
800 Third Avenue 1251 Avenue of the Americas
New York, New York 10022 New York, New York 10020
(212) 688-7000 (212) 835-6270
Approximate date of commencement of proposed sale to the 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: [X]
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: [ ]
<PAGE>
_________________
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
<CAPTION>
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Offered Registered(2) Offering Price Per Unit(3) Aggregate Offering Price Registration Fee
- ------------------------ ------------- -------------------------- ------------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par value 4,600,000 $5.00 $23,000,000.00 $7,931.00
$.001 per share
<FN>
______________
(1) Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Act"), the Prospectus included herein also relates to 4,600,000 shares of
the Registrant's Common Stock, par value $.001, previously registered under
Registration Statement No. 33-75750 on Form S-1, which was filed with the
Securities and Exchange Commission on February 25, 1994. On such date, a
registration fee of $7,931.03 was paid.
(2) Maximum number of shares issuable to GKN Securities Corp. and Brean Murray,
Foster Securities Inc. (together, the "Purchasers") pursuant to the standby
arrangements described herein.
(3) Based upon the per share purchase price of the Registrant's Common Stock
issuable to the Purchasers pursuant to the standby arrangements described
herein.
</FN>
</TABLE>
__________________
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
KELLSTROM INDUSTRIES, INC.
Cross Reference Sheet
<TABLE>
FORM S-3 CAPTION OR LOCATION IN PROSPECTUS
ITEM NO. ---------------------------------
- --------
<S> <C> <C>
1 Forepart of the Registration Statement and Outside Front Cover Page of Prospectus
Outside Front Cover Page of Prospectus
2 Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover Pages
of Prospectus of Prospectus
3 Summary Information and Risk Factors Outside Front Cover Page of Prospectus;
Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price Outside Front Cover Page of Prospectus
6 Dilution Not Applicable
7 Selling Security Holders Standby and Other Arrangements
8 Plan of Distribution Outside Front Cover Page of Prospectus;
Standby and Other Arrangements
9 Description of Securities to be Registered Not Applicable
10 Interests of Named Experts and Counsel Legal Matters; Experts
11 Material Changes The Company
12 Incorporation of Certain Information Incorporation of Certain Documents by Reference
by Reference
13 Disclosure of Commission Position on Indemnification of Directors and Officers
Indemnification for Securities Act Liabilities
</TABLE>
<PAGE>
[Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 16, 1996
PROSPECTUS
KELLSTROM INDUSTRIES, INC.
(formerly known as Israel Tech Acquisition Corp.)
4,600,000 Shares of Common Stock
This Prospectus relates to the issuance of a maximum of 4,600,000 shares of
common stock, par value $.001 per share (the "Common Stock"), of Kellstrom
Industries, Inc., a Delaware corporation (formerly known as Israel Tech
Acquisition Corp.) (the "Company"), upon the exercise of the Company's
outstanding Redeemable Common Stock Purchase Warrants (the "Warrants"), and
under the standby arrangements described in this Prospectus. Common Stock resold
under such standby arrangements will be sold pursuant to this Prospectus.
Each Warrant entitles the holder thereof to purchase one share of Common
Stock for $5.00, subject to adjustment in certain circumstances, at any time
through and including April 11, 2001. The Warrants are redeemable by the
Company, with the consent of GKN Securities Corp. ("GKN") and Brean Murray,
Foster Securities Inc. ("Brean Murray", and together with GKN, the
"Purchasers"), the underwriters of the Company's initial public offering
consummated in April 1994, upon notice (the "Redemption Notice") of not less
than 30 days, at a price of $.01 per Warrant (the "Redemption Price"), provided
that the last sale price of the Common Stock on all 20 consecutive trading days
ending on the third day prior to the date on which the Redemption Notice is
given has been at least 170% of the then effective exercise price of the
Warrants (currently $8.50 based on the $5.00 exercise price, subject to
adjustment). The Company intends to redeem the Warrants in accordance with such
terms and has obtained the consent of the Purchasers to do so. Based upon the
historical price per share of the Common Stock, on the date of this Prospectus
the Company does not have the ability to redeem the Warrants. Any Warrants not
exercised for shares of Common Stock prior to the close of business on the date
fixed for redemption (the "Expiration Date") will be redeemed. From and after
the Expiration Date, holders of Warrants will be entitled only to the Redemption
Price.
The Company has entered into a standby purchase agreement (the "Standby
Agreement") with the Purchasers pursuant to which the Purchasers have agreed,
subject to the Redemption Notice having been given on or prior to December 31,
1996, to purchase from the Company such number of shares of Common Stock (the
"Standby Shares") as would have been issuable upon the exercise of any Warrants
which have not been duly exercised by the close of business on the Expiration
Date. The Purchasers have committed to purchase up to an aggregate of 4,600,000
shares of Common Stock as Standby Shares at a purchase price equal to $5.00 per
share. Pursuant to the terms of the Standby Agreement, upon the closing of the
purchase of the Standby Shares, if any, the Company will pay to the Purchasers a
commitment fee of $690,000 and will issue to the Purchasers warrants
("Purchasers' Warrants") to purchase an aggregate of 500,000 shares of Common
Stock, with 250,000 of such warrants exercisable at $10.00 per share and 250,000
exercisable at $12.50 per share. The Purchasers' Warrants are exercisable for a
four-year period beginning one year from the date of issuance. The Company has
also agreed to reimburse the Purchasers for their out-of-pocket expenses
incurred in connection with the Standby Agreement (not to exceed $25,000). If
the Redemption Notice has not been sent to the Warrantholders on or before
December 31, 1996, or if the Standby Agreement is otherwise terminated in
accordance with its terms, (a) the Purchasers will be entitled to a fee equal to
$.15 per Warrant for each Warrant exercised prior to December 31, 1996 or such
other date of termination as well as warrants with terms substantially identical
to the Purchasers' Warrants to purchase such number of shares of Common Stock
which equals the product of (i) 500,000 and (ii) the number of Warrants
exercised prior to December 31, 1996 or such other date of termination divided
by 4,600,000 and (b) the Purchasers will be entitled to a fee equal to $.125 per
Warrant for each Warrant exercised after December 31, 1996 or such other date of
termination. The Purchasers may acquire Warrants in the open market or otherwise
prior to the close of business on the Expiration Date, and have agreed to
exercise any Warrants so purchased. See "Standby and Other Arrangements."
<PAGE>
Prior to or after the Expiration Date, the Purchasers intend to offer
shares of Common Stock, including shares of Common Stock acquired pursuant to
the standby arrangements or upon the exercise of Warrants, directly to the
public at prices set from time to time by the Purchasers. In effecting such
transactions, the Purchasers may realize profits or losses independent of the
compensation described under "Standby and Other Arrangements." The Purchasers
may also make sales to dealers at prices which represent concessions, in amounts
to be determined from time to time by the Purchasers, from the prices at which
such shares of Common Stock are then being offered to the public. Any shares of
Common Stock so offered are subject to prior sale, when, as and if delivered to
and accepted by the Purchasers, and subject to the Purchasers' right to reject
orders in whole or in part.
The principal market for trading of the Common Stock and the Warrants is
the Nasdaq SmallCap Market under the symbols KELL and KELLW, respectively. On
August 15, 1996, the last sale price for the Common Stock was $7.69 and for the
Warrants was $2.88 as reported on the Nasdaq SmallCap Market.
___________________
PURCHASE OF THE COMMON STOCK IS SPECULATIVE,
INVOLVES A HIGH DEGREE OF RISK, AND SHOULD BE CONSIDERED
ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Underwriting Discounts
Public and Commissions(1) Proceeds to Company
-------- ---------------------- -------------------
Per Share....... $ 5.00 $ 0.00 $ 5.00
Total(3)........ $23,000,000.00 $ 0.00 $23,000,000.00
___________________
(1) Does not reflect compensation to be received by the Purchasers in the form
of (a) a commitment fee of $690,000 payable upon closing of the purchase of
the Standby Shares, (b) five-year warrants to purchase 500,000 shares of
Common Stock, with 250,000 of such warrants exercisable at $10.00 per share
and 250,000 exercisable at $12.50 per share issuable upon closing of the
purchase of the Standby Shares, and (c) reimbursement of the out-of-pocket
expenses of the Purchasers in an aggregate amount not to exceed $25,000.
The Company has also agreed to indemnify the Purchasers against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Standby and Other Arrangements."
(2) Before deducting expenses payable by the Company, estimated at $50,000.
(3) Assumes all of the Standby Shares, if any, have been purchased by the
Purchasers pursuant to the Standby Agreement.
___________________
BREAN MURRAY, FOSTER SECURITIES INC. GKN SECURITIES CORP.
The date of this Prospectus is August __, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE PURCHASERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE COMMON STOCK,
THE WARRANTS OR BOTH AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission may be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 as well as at the following Commission
regional offices: 500 West Madison Street, Chicago, Illinois 60661; Seven World
Trade Center, New York, New York 10048; and 1401 Brickell Avenue, Miami, Florida
33131. Copies of such material can be obtained from the Public Reference Section
of the Commission at prescribed rates by writing to the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such reports and other information can
also be reviewed through the Commission's Electronic Data Gathering, Analysis,
and Retrieval System which is publicly available through the Commission's Web
site (http://www.sec.gov).
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act") (herein, together with all amendments and
exhibits, referred to as the "Registration Statement"). This Prospectus does not
contain all the information set forth in the Registration Statement, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and its Common
Stock and Warrants, reference is hereby made to the Registration Statement.
Statements contained herein concerning the provisions of any document are not
necessarily complete, and in each instance reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement contained herein is qualified in its
entirety by such reference.
The Company furnishes annual reports to its stockholders which include
audited financial statements. The Company may also furnish quarterly financial
statements to its stockholders and such other reports as may be authorized by
its Board of Directors.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (Exchange
Act File No. 0-23764), are incorporated in this Prospectus by reference and made
a part hereof:
(1) Annual Report on Form 10-KSB of the Company for the fiscal year ended
December 31, 1995;
(2) Quarterly Report on Form 10-QSB of the Company for the fiscal quarter ended
March 31, 1996;
(3) Current Report of the Company on Form 8-K filed on April 26, 1996; and
(4) Quarterly Report on Form 10-QSB of the Company for the fiscal quarter ended
June 30, 1996.
The Company's Registration Statement on Form 8-A (which contains
descriptions of the Common Stock and Warrants), which was declared effective by
the Commission on April 11, 1994, is also incorporated in this Prospectus by
reference and made a part hereof.
2
<PAGE>
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference in this Prospectus and shall be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated by reference in this Prospectus and filed with the
Commission prior to the date of this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document which is deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Written or telephone requests for such copies should be
directed to 14000 N.W. 4th Street, Sunrise, Florida 33325, Attention: Investor
Relations (telephone number: (954) 845-0427).
No dealer, salesman or other person is authorized in connection with any
offering made hereby to give any information or to make any representation not
contained in this Prospectus, and if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities offered hereby
nor does it constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby to any person in any jurisdiction in which it
is unlawful to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create any
implication that the information contained herein is correct as of any date
subsequent to the date hereof.
TABLE OF CONTENTS
PAGE
Available Information...............................................2
Incorporation of Certain Documents by Reference.....................2
The Company ........................................................4
Risk Factors........................................................4
Use of Proceeds.....................................................6
Standby and Other Arrangements......................................6
Indemnification of Directors and Officers...........................7
Legal Matters.......................................................7
Experts.............................................................7
3
<PAGE>
THE COMPANY
Kellstrom Industries, Inc. ("Kellstrom" or the "Company"), which conducts
its business under the name "Westco International", engages in the purchasing,
refurbishing (through subcontractors), marketing and distributing of commercial
jet engines and jet engine parts. The Company's customers include major domestic
and international airlines, engine manufacturers, engine part distributors and
dealers and overhaul service suppliers throughout the world. The Company enables
customers to reduce their engine maintenance costs by providing Federal Aviation
Administration-approved engines and engine parts on a timely basis and at
competitive prices. Upon consummation by Israel Tech Acquisition Corp. ("ITAC")
of the acquisition of substantially all of the assets of Kellstrom in June 1995,
ITAC changed its name to Kellstrom. The Company's operations are conducted at
its facility located at 14000 N.W. 4th Street, Sunrise, Florida 33325, and its
telephone number is (954) 845-0427.
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk. Each prospective investor should consider carefully the following risk
factors in addition to the other information presented in, and incorporated by
reference into, this Prospectus before making an investment decision.
RISKS APPLICABLE TO THE AIRCRAFT ENGINE BUSINESS. An investment in
companies in the aircraft engine part distribution and refurbishing (through
third parties) business entails special considerations and risks. These
businesses are highly competitive and are characterized by price fluctuations in
inventories and the discontinuing of certain engine types due to airline
operational decisions.
DEPENDENCE UPON KEY PERSONNEL. The Company depends upon the efforts of the
officers and directors of the Company. The loss of the services of such key
personnel could have a material adverse effect on the Company's ability to
successfully achieve its business objectives. Although each of the executive
employees has executed an employment agreement which prohibits him from
competing against the Company for a specified period of time, there can be no
assurance that such remedy will be available to the Company or that such
protection will mitigate any losses incurred as a result of a termination of
employment.
DIVIDENDS UNLIKELY. The Company has not paid any dividends on its Common
Stock to date. The payment of dividends will be contingent upon the Company's
revenues and earnings, if any, capital requirements and general financial
condition. The payment of any dividends will be within the discretion of the
Board of Directors of the Company. It is the present intention of the Board to
retain all earnings, if any, for use in the Company's business operations and,
accordingly, the Board does not anticipate declaring any dividends in the
foreseeable future.
POSSIBLE VOLATILITY OF SECURITIES PRICES. The market price of the Company's
securities may be highly volatile. Factors such as the Company's operating
results or other announcements by the Company or its competitors may have a
significant effect on the market price of the Company's securities. In addition,
market prices for securities of many small capitalization companies have
experienced wide fluctuations in response to variations in quarterly operating
results and general economic indicators and conditions, as well as other factors
beyond the control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE. Substantially all of the Company's
outstanding shares of Common Stock and Warrants have been registered for sale
under the Securities Act or are eligible for sale under an exemption therefrom.
In addition, the holders of other warrants are entitled to certain "piggyback"
registration rights upon the exercise of up to 400,000 shares of Common Stock,
and holders of certain options will be entitled, upon exercise thereof, to up to
200,000 shares of Common Stock and warrants to purchase up to 400,000 shares of
Common Stock with certain demand and "piggyback" registration rights. Upon the
issuance of the Purchasers' Warrants in accordance with the Standby Agreement,
the holders thereof will be granted certain demand and "piggyback" registration
rights. The possibility that substantial amounts of Common Stock or Warrants
4
<PAGE>
may be sold in the public market may adversely affect prevailing market prices
for the Common Stock or the Warrants and could impair the Company's ability to
raise capital through the sale of its equity securities.
OUTSTANDING WARRANTS AND OPTIONS; POTENTIAL ADVERSE EFFECT ON MARKET PRICE
OF COMMON STOCK AND WARRANTS. The Company has 4,600,000 Warrants outstanding,
exercisable at a price of $5.00 per share. Additionally, the Company has
reserved an aggregate of 2,860,000 shares of Common Stock for issuance upon
exercise of other outstanding warrants and options. To the extent that
outstanding options and warrants are exercised, dilution of the percentage
ownership of the Company's stockholders will occur, and any sales in the public
market of the Common Stock underlying such options and warrants may adversely
affect prevailing market prices for the Common Stock and the Warrants. Moreover,
the terms upon which the Company will be able to obtain additional equity
capital may be adversely affected since the holders of outstanding options and
warrants can be expected to exercise them at a time when the Company would, in
all likelihood, be able to obtain any needed capital on terms more favorable to
the Company than those provided in the outstanding options and warrants.
POSSIBLE INABILITY TO EXERCISE WARRANTS. The Company intends to qualify the
sale of the Common Stock issuable upon exercise of the Warrants in a limited
number of states. Although certain exemptions in the securities laws of certain
states might permit Warrants to be transferred to purchasers in states other
than those in which the Warrants were initially qualified, the Company will be
prevented from issuing Common Stock in such other states upon the exercise of
the Warrants unless an exemption from qualification is available or unless the
issuance of Common Stock upon exercise of the Warrants is qualified. The Company
is under no obligation to seek, and may decide not to seek or may not be able to
obtain, qualification of the issuance of such Common Stock in all of the states
in which the ultimate purchasers of the Warrants reside. In such a case, the
Warrants held will expire and have no value if such Warrants cannot be sold.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS. The Warrants may be
redeemed by the Company, with the consent of the Purchasers, at any time upon
notice of not less than 30 days, at a price of $.01 per Warrant (the "Redemption
Price"), provided the closing sales price of the Common Stock on all 20
consecutive trading days ending on the third day prior to the day on which the
Company gives notice has been at least 170% of the then effective exercise price
($8.50 based upon the current exercise price, subject to adjustment). Redemption
of the Warrants could force the holders to exercise the Warrants and pay the
exercise price at a time when it may be disadvantageous for the holders to do
so, to sell the Warrants at the then current market price when they might
otherwise wish to hold the Warrants or to accept the Redemption Price, which is
likely to be substantially less than the market value of the Warrants at the
time of redemption.
AUTHORIZATION AND DISCRETIONARY ISSUANCE OF PREFERRED STOCK. The Company's
Restated Certificate of Incorporation, as amended, authorizes the issuance of up
to 1,000,000 shares of Preferred Stock with such rights and preferences as may
be determined from time to time by the Board of Directors. No shares of
Preferred Stock are currently outstanding. Accordingly, under the Restated
Certificate of Incorporation, as amended, the Board of Directors may, without
stockholder approval, issue Preferred Stock with dividend, liquidation,
conversion, voting, redemption or other rights which could adversely affect the
voting power or other rights of the holders of the Common Stock. The issuance of
any shares of Preferred Stock having rights superior to those of the Common
Stock may result in a decrease of the value or market price of the Common Stock
and could further be used by the Board as a device to prevent change in control
of the Company. Holders of the Preferred Stock may have the right to receive
dividends, certain preferences in liquidation and conversion rights. In
addition, the Preferred Stock could be utilized under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company does not currently intend to issue any shares of
Preferred Stock, there can be no assurance that the Company will not do so in
the future.
5
<PAGE>
USE OF PROCEEDS
The Company will derive net proceeds, after payment of costs of this
offering (including fees and expenses payable to the Purchasers), of
approximately $22,235,000 upon exercise of the Warrants and the sale of
the Standby Shares to the Purchasers pursuant to the Standby Agreement. The
Company intends to apply approximately $4,000,000 of such proceeds to reduce
outstanding indebtedness under the Company's working capital line of credit with
BankAtlantic, a federal savings bank ("BankAtlantic"). The remaining net
proceeds will be used to finance any future acquisitions, purchase additional
inventory and for other working capital and general corporate purposes. The
working capital line bears interest at the rate of 1% over the prime rate as
announced from time to time by BankAtlantic and matures on May 31, 1997. The
Company anticipates that the amounts repaid under the credit facility with such
proceeds will eventually be reborrowed in order to finance future purchases of
inventory.
STANDBY AND OTHER ARRANGEMENTS
The Company has entered into a standby purchase agreement (the "Standby
Agreement") with the Purchasers pursuant to which the Purchasers have agreed,
subject to the Redemption Notice having been given on or prior to December 31,
1996, to purchase from the Company such number of shares of Common Stock (the
"Standby Shares") as would have been issuable upon exercise of any Warrants
which have not been duly exercised by the close of business on the Expiration
Date. The Purchasers have committed, severally but not jointly, to purchase up
to an aggregate of 4,600,000 shares of Common Stock as Standby Shares at a
purchase price equal to $5.00 per share. Each Purchaser has agreed to purchase
one-half of the Standy Shares.
The Purchasers may acquire Warrants in the open market or otherwise prior
to the close of business on the Expiration Date. The Purchasers have agreed to
exercise all Warrants owned by them or so acquired.
The Company has been advised by the Purchasers that they propose to offer
any Standby Shares purchased from the Company pursuant to the Standby Agreement
or acquired upon exercise of Warrants for resale as set forth on the cover page
of this Prospectus. The Purchasers may also make sales of such shares to certain
securities dealers at prices which may represent concessions from the prices at
which shares are then being offered to the public, and such dealers may reallow
a concession to certain other brokers and dealers. The amount of such
concessions and reallowances will be determined from time to time by the
Purchasers.
Pursuant to the terms of the Standby Agreement and in consideration of the
Purchasers' obligations thereunder, upon the closing of the purchase of the
Standby Shares, if any, the Company will pay to the Purchasers a commitment fee
of $690,000 and will issue to the Purchasers warrants ("Purchasers' Warrants")
to purchase an aggregate of 500,000 shares of Common Stock, with 250,000 of such
warrants exercisable at $10.00 per share and 250,000 exercisable at $12.50 per
share. The Purchasers' Warrants, which will be exercisable for a four-year
period beginning one year from the date of issuance, grant the holders thereof
certain demand and "piggyback" registration rights. The Company has also agreed
to reimburse the Purchasers for their out-of-pocket expenses incurred in
connection with the Standy Agreement (not to exceed $25,000). If the Redemption
Notice has not been sent to the Warrantholders on or prior to December 31, 1996,
or if the Standby Agreement is otherwise terminated in accordance with its
terms, (a) the Purchasers will be entitled to a fee equal to $.15 per Warrant
for each Warrant exercised prior to December 31, 1996 or such other date of
termination as well as warrants with terms substantially identical to the
Purchasers' Warrants to purchase such number of shares of Common Stock which
equals the product of (i) 500,000 and (ii) the number of Warrants exercised
prior to December 31, 1996 or such other date of termination divided by
4,600,000 and (b) the Purchasers will be entitled to a fee equal to $.125 per
Warrant for each Warrant exercised after December 31, 1996 or such other date of
termination. The Company has also agreed to pay certain blue sky legal fees and
National Association of Securities Dealers, Inc. ("NASD") fees of the Purchasers
incurred in connection with the Standby Agreement. Notwithstanding the
foregoing, under no circumstances shall the aggregate Purchasers' compensation
payable under the Standby Agreement exceed the maximum amount permitted to be
paid under the rules and interpretations of the NASD.
The Company and each officer and director of the Company has agreed not to
sell, contract to sell or otherwise dispose of any shares of Common Stock or
rights to acquire such shares, or register the public offering, sale or other
distribution of any shares of Common Stock held by third parties, with certain
exceptions, for a period of 90 days commencing upon the purchase of the
Standby Shares, if any, without the written consent of the Purchasers.
6
<PAGE>
The Company has agreed to indemnify the Purchasers against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Purchasers may be required to make in respect thereof.
The Purchasers acted as the underwriters in connection with the Company's
initial public offering in April 1994 (the "IPO"), in which the Company raised
approximately $11,321,000 of net proceeds. Pursuant to the Standby Agreement,
the warrants issuable to the Purchasers upon the exercise of the underwriters'
unit purchase options granted in connection with the IPO shall not be redeemable
by the Company. The Company also agreed to indemnify the Purchasers against
certain liabilities in connection with the IPO under the Securities Act. In
February 1994, GKN acted as placement agent for the Company's bridge financing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Delaware (the "GCL") authorizes
Delaware corporations to eliminate or limit the personal liability of a director
to the corporation or a stockholder for monetary damages for breach of certain
fiduciary duties as a director, other than his duty of loyalty to the
corporation and its stockholders, or for acts or omissions not in good faith or
involving intentional misconduct or knowing violation of law, and the unlawful
purchase or redemption of stock or payment of unlawful dividends or the receipt
of improper benefits. The Company's Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), includes a provision eliminating
such personal liability. The Certificate of Incorporation, as well as the
By-Laws of the Company, provide for the indemnification of the officers and
directors of the Company to the fullest extent permitted under the GCL. In
addition, the Company has executed agreements with the officers and directors of
the Company that require the Company to indemnify such individuals for
liabilities incurred by them because of an act, omission, neglect or breach of
duty committed while acting in the capacity of an officer or director. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Cooperman Levitt Winikoff Lester & Newman,
P.C.
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994,
and for each of the years in the two-year period ended December 31, 1995 have
been incorporated herein by reference and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated herein by reference, and upon the authority of said
firm as experts in accounting and auditing.
7
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various costs and expenses expected to
be incurred by the Company in connection with the sale and distribution of the
securities being registered. All of the amounts are estimated except the
Commission registration fee.
Commission Registration Fee........................... $ 7,931.00
Blue Sky Fees and Expenses (including counsel fees)... *
Transfer Agent's Fees and Expenses.................... *
Accounting Fees....................................... 5,000.00
Legal Fees and Expenses............................... *
Printing Expenses..................................... 5,000.00
Miscellaneous Expenses................................ *
Total................................................. $ 50,000.00
_______
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware (the "DGCL")
provides that a Delaware corporation may indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceedings, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) judgments, fines, and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interest and, with respect to any criminal action or
proceedings, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any person who is, 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 by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if such person is adjudged to be liable to
the corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation") provides for the indemnification of directors
and officers of the Company to the fullest extent permitted by Section 145 of
the DGCL. In that regard, ARTICLE TENTH, paragraph A of the Certificate of
Incorporation provides that the personal liability of a director or officer of
the Company to the Company or its stockholders for monetary damages for breach
of fiduciary duty as a director or officer shall be limited to the fullest
extent permitted
II-1
<PAGE>
by the DGCL, as it now exists or may hereafter be amended and that any repeal or
modification of ARTICLE TENTH, paragraph A of the Certificate of Incorporation
by the stockholders of the Company shall not adversely affect any right or
protection of a director or officer of the Company existing at the time of such
repeal or modification.
In addition, Article VIII of the By-laws of the Company provide
indemnification to the fullest extent permitted by the DGCL as follows:
Section 1. Indemnification Generally. The Company shall, to the fullest
extent permitted by the General Company Law of the State of Delaware (the
"GCL"), as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.
Section 2. Good Faith Defined. For purposes of any determination under this
Article VIII, a person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company, or, with respect to any criminal action, or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Company or another enterprise, or on
information supplied to him by the officers of the Company or another enterprise
in the course of their duties, or on the advice of legal counsel for the Company
or another enterprise or on information or records given or reports made to the
Company or another enterprise by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the Company or
another enterprise. The term "another enterprise" as used in this Section 2
shall mean any other corporation or partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the Company
as a director, officer, employee or agent. The provisions of this Section 2
shall not be deemed to be exclusive or to limit in any way the circumstances in
which a person may be deemed to have met the applicable standard of conduct.
Section 3. Indemnification by a Court. Notwithstanding any determination on
the part of the Company or its agents that indemnification of any director ,
officer, employee or agent is not proper, and notwithstanding the absence of any
determination, any director, officer, employee or agent may apply to any court
of competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under this Article VIII. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in this Article VIII or the GCL, as the case may be. Notice of any application
for indemnification pursuant to this Section 3 shall be given to the Company
promptly upon the filing of such application.
Section 4. Non-Exclusivity of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Company that indemnification of any director, officer, employee or agent of the
Company or any director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise who is serving at the
request of the Company shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any director, officer, employee or agent of the Company or
any director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise who is serving at the request of the
Company who is not specified in this Article VIII but whom the Company has the
power or obligation to indemnify under the provisions of the GCL, or otherwise.
Section 5. Insurance. The Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
II-2
<PAGE>
such, whether or not the Company would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
Section 6. Meaning of "Company" for Purposes of Article VIII. For purposes
of this Article VIII, reference to "the Company" include, in addition to the
corporation resulting from any consolidation or merger, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have power and authority to indemnify its directors, officers, and employees or
agents of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article VIII with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
Section 7. Survival of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
The Company has executed agreements with Messrs. Nedivi, Gleason, Motisi,
Steele, Rosenfeld, Stern and Mitchell that require the Company to indemnify
these individuals for liabilities incurred by them because of an act or omission
or neglect or breach of duty committed while acting in the capacity of an
officer or director of the Company. Certain actions, including acts for which
the individual is removed or terminated for cause, are excluded from the
coverage of the agreement.
Item 16. Exhibits.
EXHIBIT DESCRIPTION
NO.
- ------- -----------
1.1 Standby Agreement, dated August __, 1996, between the Company and GKN
Securities Corp and Brean Murray, Foster Securities Inc.
3.1 Restated Certificate of Incorporation(1)
3.2 Certificate of Amendment to the Restated Certificate of Incorporation
3.3 By-Laws(1)
4.1 Form of Common Stock Certificate(1)
4.2 Form of Warrant Certificate(1)
4.3 Form of Unit Purchase Option Granted to Purchasers(1)
4.4 Form of Warrant issued in Bridge Financing(1)
4.5 Warrant Agreement between Continental Stock Transfer & Trust Company
and the Company(1)
4.6 Form of Warrant issued to Purchasers*
5.1 Opinion of Cooperman Levitt Winikoff Lester & Newman, P.C. as to the
legality of the shares being registered*
10.1 Asset Purchase Agreement, dated February 15, 1995, among the Company,
Rada Electronic Industries Limited, Tasco Electronics Inc. and KST
Corp.(2)
10.2 Marketing, Management and Consulting Agreement, dated February 3,
1995, between the Company and Rada Electronics Industries Limited
10.3 Employment Agreement, dated June 9, 1995, between Zivi R. Nedivi and
the Company(3)
10.4 Amendment No. 1 to Employment Agreement, dated as of April 18, 1996,
between Zivi R. Nedivi and the Company
10.5 Employment Agreement, dated May 18, 1995, between John S. Gleason and
the Company(3)
10.6 Amendment No. 1 to Employment Agreement, dated as of April 18, 1996,
between John S. Gleason and the Company
II-3
<PAGE>
10.7 Employment Agreement, dated June 2, 1995, between Anthony Motisi and
the Company (3)
10.8 Amendment No. 1 to Employment Agreement, dated as of April 18, 1996,
between Anthony Motisi and the Company
10.9 Employment Agreement, dated as of January 30, 1996, between Paul F.
Steele and the Company
10.10 Amendment No. 1 to Employment Agreement, dated April 18, 1996,
between Paul F. Steele and the Company
10.11 Indemnification Agreement, dated as of April 23, 1996, between the
Company and Joram D. Rosenfeld
10.12 Indemnification Agreement, dated as of April 23, 1996, between the
Company and Yoav Stern
10.13 Indemnification Agreement, dated as of April 23, 1996, between the
Company and David Jan Mitchell
10.14 Stockholders Agreement, dated August 24, 1995, among Zivi R. Nedivi,
Joram D. Rosenfeld and Yoav Stern(4)
10.15 Amendment to Stockholders Agreement, dated as of January 15 1996,
among Zivi R. Nedivi, Joram D. Rosenfeld and Yoav Stern
10.16 Stock Purchase Agreement, dated August 24, 1995, between the Company
and Zivi R. Nedivi(4)
10.17 Amendment to Stock Purchase Agreement, dated as of January 15, 1996,
between the Company and Zivi R. Nedivi
10.18 1995 Stock Option Plan(5)
10.19 Warrant issued to Allen & Company
10.20 Form of Warrant issued to J.W. Charles Securities Inc.
10.21 Warrant issued to John Gleason
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Cooperman Levitt Winikoff Lester & Newman, P.C.
(included as Exhibit 5.1)
24.1 Power of Attorney (included as part of signature page)
___________________
(1) Incorporated by reference to Amendment No. 1 to Registration Statement on
Form S-1, Number 33-75750, filed with the Commission on April 1, 1994.
(2) Incorporated by reference to the Current Report on From 8-K/A filed with
the Commission on March 14, 1994.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1, Number 33-75750, filed with the
Commission on October 13, 1995.
(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995.
(5) Incorporated by reference to the Company's Proxy Statement for Special
Meeting dated May 12, 1995.
* To be filed by amendment.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) To include any additional or changed material information on
the plan of distribution;
II-4
<PAGE>
(2) For determining liability under the Securities Act of 1933, to
treat each such post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of the
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) For the purpose of determining liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunrise, State of Florida, on the 16th day of August,
1996.
KELLSTROM INDUSTRIES, INC.
By: /s/ ZIVI R. NEDIVI
-----------------------
Zivi R. Nedivi
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Zivi R. Nedivi and/or John Gleason his true and
lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, including post-effective amendments, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission and any state securities commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
/s ZIVI R. NEDIVI Chief Executive Officer, President August 16, 1996
- ------------------ and Director
Zivi R. Nedivi (Principal Executive Officer)
/s/ YOAV STERN Co-Chairman of the Board of Directors August 16, 1996
- ------------------
Yoav Stern
/s/ JORAM D. ROSENFELD Co-Chairman of the Board of Directors August 16, 1996
- ------------------
Joram D. Rosenfeld
/s/ DAVID J. MITCHELL Director August 16, 1996
- ------------------
David J. Mitchell
/s/ JOHN GLEASON Chief Financial Officer and Treasurer August 16, 1996
- ------------------ (Principal Financial Officer and
John Gleason Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE
1.1 Standby Agreement, dated August___, 1996, between
the Company and GKN Securities Corp. and Brean
Murray, Foster Securities Inc.(1)
3.1 Restated Certificate of Incorporation(1)
3.2 Certificate of Amendment to the Restated
Certificate of Incorporation
3.3 By-Laws(1)
4.1 Form of Common Stock Certificate(1)
4.2 Form of Warrant Certificate(1)
4.3 Form of Unit Purchase Option Granted to
Purchasers(1)
4.4 Form of Warrant issued in Bridge Financing(1)
4.5 Warrant Agreement between Continental Stock
Transfer & Trust Company and the Company(1)
4.6 Form of Warrant issued to Purchasers*
5.1 Opinion of Cooperman Levitt Winikoff Lester
& Newman, P.C. as to the legality of the shares
being registered*
10.1 Asset Purchase Agreement dated February 15,
1995, among the Company, Rada Electronic
Industries Limited, Tasco Electronics Inc.
and KST Corp.(2)
10.2 Marketing, Management and Consulting Agreement,
dated February 3, 1995, between the Company and
Rada Electronic Industries, Ltd.
10.3 Employment Agreement, dated June 9, 1995, between
Zivi R. Nedivi and the Company(3)
10.4 Amendment No. 1 to Employment Agreement, dated
as of April 18, 1996, between Zivi R. Nedivi and
the Company
10.5 Employment Agreement, dated May 18, 1995, between
John S. Gleason and the Company(3)
10.6 Amendment No. 1 to Employment Agreement, dated
as of April 18, 1996, between John S. Gleason
and the Company
10.7 Employment Agreement, dated June 2, 1995, between
Anthony Motisi and the Company(3)
10.8 Amendment No. 1 to Employment Agreement, dated as
of April 18, 1996, between Anthony Motisi and the
Company
10.9 Employment Agreement, dated as of January 30,
1996, between Paul F. Steele and the Company
10.10 Amendment No. 1 to Employment Agreement, dated as
of April 18, 1996, between Paul F. Steele and the
Company
10.11 Indemnification Agreement, dated as of April 23,
1996, between the Company and Joram D. Rosenfeld
<PAGE>
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE
10.12 Indemnification Agreement, dated as of April 23,
1996, between the Company and Yoav Stern
10.13 Indemnification Agreement, dated as of April 23,
1996, between the Company and David Jan Mitchell
10.14 Stockholders Agreement, dated August 24, 1995,
among Zivi R. Nedivi, Joram D. Rosenfeld and Yoav
Stern(4)
10.15 Amendment to Stockholders Agreement, dated as of
January 15, 1996, among Zivi R. Nedivi, Joram D.
Rosenfeld and Yoav Stern
10.16 Stock Purchase Agreement, dated August 24, 1995,
between the Company and Zivi R. Nedivi(4)
10.17 Amendment to Stock Purchase Agreement, dated as of
January 15, 1996, between the Company and Zivi R.
Nedivi
10.18 1995 Stock Option Plan(5)
10.19 Warrant issued to Allen & Company
10.20 Form of Warrant issued to J. W. Charles
Securities Inc.
10.21 Warrant issued to John Gleason
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Cooperman Levitt Winikoff Lester & Newman,
P.C (included as Exhibit 5.1)
24.1 Power of Attorney (included as part of signature page)
- --------------------------------------
* To be filed by amendment
(1) Incorporated by reference to Amendment No. 1 to Registration Statement
on Form S-l, Number 33-75750, filed with the Commission on April 1,
1994.
(2) Incorporated by reference to the Current Report on Form 8-K/A filed
with the Commission on March 14, 1994.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1, Number 33-75750, filed with the
Commission on October 13, 1995.
(4) Incorporated by reference to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1995. (5) Incorporated by
reference to the Company's Proxy Statement for Special Meeting dated
May 12, 1995.
(5) Incorporated by reference to the Company's Proxy Statement for Special
Meeting dated May 12, 1995.
Exhibit 1.1
4,600,000 COMMON STOCK PURCHASE WARRANTS
KELLSTROM INDUSTRIES, INC.
STANDBY AGREEMENT
August __, 1996
Brean Murray, Foster Securities Inc.
633 Third Avenue
New York, New York 10017
GKN Securities Corp.
61 Broadway
New York, New York 10006
Dear Sirs:
Kellstrom Industries, Inc., a Delaware corporation (the "Company"), intends
to call for redemption all its outstanding Redeemable Common Stock Purchase
Warrants (the "Warrants") at a price of $.01 per Warrant (the "Redemption
Price") on the date (the "Redemption Date") which is not less than thirty days
after the Company has given written notice to the Warrantholders of such
redemption (the "Notice of Redemption"), provided that the last sale price of
the Company's Common Stock, $.001 par value per share (the "Common Stock"), on
all twenty consecutive trading days ending on the third day prior to the date of
the Notice of Redemption has been at least 170% of the then effective exercise
price of the Warrants (currently $8.50 based on a $5.00 exercise price, subject
to adjustment). Following the giving of the Notice of Redemption, the Warrants
will be exercisable until the Redemption Date. The Company desires to make
arrangements pursuant to which you (the "Purchasers") will purchase from the
Company, on the terms and subject to the conditions set forth herein, such
number of shares of Common Stock, if any (the "Standby Shares"), that would have
been issuable upon exercise of any Warrants that have not been exercised on or
prior to the Redemption Date.
The Company confirms as follows its agreements with the Purchasers.
1. AGREEMENT TO SELL AND PURCHASE.
On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to each of the Purchasers, and each of the
Purchasers agrees to purchase from the Company, one-half of the Standby Shares
at a price per share of $5.00 (the "Price Per Share"). The obligations of the
Purchasers hereunder shall be several and not joint.
-1-
<PAGE>
2. DELIVERY AND PAYMENT. (a)Delivery of the Standby Shares shall be made
to the Purchasers against payment of the purchase price by certified or official
bank check payable in New York Clearing House (next-day) funds to the order of
the Company at the offices of Brean Murray, Foster Securities Inc., 633 Third
Avenue, New York, New York 10017. Such payment shall be made at 10:00 a.m.,
Eastern time, on the third business day after the Redemption Date (such date is
hereinafter referred to as the "Closing Date"). The Company shall advise the
Purchasers in writing no later than 7:00 p.m., New York City time, on the second
business day after the Redemption Date of the number of shares of Common Stock
comprising the Standby Shares.
At the Closing Date, the Company shall deliver to the Purchasers a
certificate registered in the name of each of the Purchasers representing the
Standby Shares purchased by such Purchaser. At 10:00 a.m., Eastern time, on the
second business day immediately following the Closing Date, or at such other
time on such other date as may be agreed on by the Company and the Purchasers
(the "Exchange Date"), the Company will deliver to the Purchasers, in exchange
for the certificates referred to in the preceding sentence, certificates
evidencing the Standby Shares that are in definitive form and registered in such
names and in such denominations as the Purchasers shall request at least 36
hours prior to the Exchange Date by written notice to the Company. For the
purpose of expediting the checking and packaging of certificates for the Standby
Shares, the Company agrees to make such certificates available for inspection at
least 18 hours prior to the Exchange Date.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Standby Shares by the Company to the Purchasers
shall be borne by the Company. The Company will pay and save the Purchasers and
any subsequent holder of the Standby Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
the Purchasers of the Standby Shares.
(b) It is understood that the Purchasers intend to resell the Standby
Shares at prices prevailing in the open market.
(c) Until the Redemption Date, the Purchasers may (but shall be under
no obligation to) purchase Warrants, in the open market or otherwise, in such
amounts and at such prices as the Purchasers may deem advisable. All Warrants so
purchased will be exercised by the Purchasers. It is understood that, for the
purpose of stabilizing the price of the Common Stock or otherwise, the
Purchasers may make purchases and sales of Common Stock, in the open market or
otherwise, for long or short account, on such terms as it may deem advisable and
it may overallot in arranging sales.
(d) As compensation for the commitment of the Purchasers hereunder, the
Company will pay on the Closing Date to the Purchasers by wire transfer or
certified or official bank check payable in New York Clearing House (next-day)
funds to the order of the Purchasers the sum of $690,000 and will sell to the
Purchasers or their designees warrants (the "Standby Warrants") to purchase an
aggregate of 500,000 shares of the
-2-
<PAGE>
Company's Common Stock as set forth in Section 5(n) of this Agreement. Such
compensation shall be divided equally between the Purchasers and shall not be
payable if this Agreement is terminated in accordance with its terms.
(e) Notwithstanding anything to the contrary in this Agreement, under
no circumstances shall the aggregate underwriters' compensation payable under
this Agreement exceed the maximum amount permitted to be paid under the rules
and interpretations of the National Association of Securities Dealers, Inc.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents, warrants and covenants to the Purchasers as
follows:
(a) The Company meets the requirements for use of Form S-3, and a
egistration statement on Form S-3 relating to the issuance of Common Stock upon
exercise of the Warrants or upon issuance of Common Stock to the Purchasers
hereunder and the resale of the Standby Shares acquired by the Purchasers as
contemplated hereby, including such amendments to such registration statement as
may have been required to the date of this Agreement, has been carefully
prepared by the Company 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. Copies of such registration
statement have been delivered to the Purchasers. A final prospectus will be
filed by the Company with the Commission if required by, and in accordance with,
Rule 424(b) of the Rules and Regulations. The term "Registration Statement"
means the registration statement as amended at the time it becomes effective
(the "Effective Date"), including financial statements and all exhibits. The
terms "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date. Any reference herein to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date or the date of such preliminary
prospectus or the Prospectus, as the case may be. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date, or the date of
the Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
(b) On the Effective Date, the date the Prospectus is first filed with
the Commission pursuant to Rule 424(b) (if required), at all times subsequent to
and including the Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included or incorporated by reference in the Prospectus, did or will
comply in all
-3-
<PAGE>
material respects with the Act, the Exchange Act, the rules and regulations
thereunder (the "Exchange Act Rules and Regulations") and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations and the Rules and Regulations. None of the Registration Statement,
as of the Effective Date, any post-effective amendment to the Registration
Statement, as of its effective date, or the Prospectus or any such amendment or
supplement thereto, as of the date hereof, did or will contain an untrue
statement of the material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, at the date any amendment or supplement to
the Prospectus is filed with the Commission and at the Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to the Purchasers furnished in writing to the Company by
the Purchasers specifically for inclusion in the Registration Statement or the
Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the statements with respect to the public offering of the Standby
Shares set forth under the caption "Standby and Other Arrangements" in the
Prospectus and relating to the Standby Agreement on the cover page of the
Prospectus constitute the only information relating to the Purchasers furnished
in writing to the Company by the Purchasers specifically for inclusion in the
Registration Statement. The Company has not distributed any offering material in
connection with the offering or sale of the Standby Shares other than the
Registration Statement, the Prospectus or any other materials, if any, permitted
by the Act.
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they became effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, the Exchange Act Rules and
Regulations and the Rules and Regulations, as applicable, and any documents so
filed and incorporated by reference subsequent to the Effective Date shall, when
they are filed with the Commission, conform in all material respects with the
requirements of the Act and the Exchange Act, the Exchange Act Rules and
Regulations and the Rules and Regulations, as applicable.
(d) The Company has no subsidiaries. The Company is, and at the Closing
Date will be, a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
has, and at the Closing Date will have, full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration Statement and
the Prospectus. The Company is, and at the Closing Date will be, duly licensed
or qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which it owns or leases properties or otherwise maintains an
office for the transaction of business, or in which the failure to be so
licensed or qualified or in good standing could subject it to a material
liability or disability. The Company does not own, and at the Closing Date will
not own, directly or
-4-
<PAGE>
indirectly, any shares of stock or any other equity or long-term debt securities
of any corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity. Complete and correct copies of the
Certificate of Incorporation and the By-Laws of the Company and all amendments
thereto have been delivered to the Purchasers, and no changes therein will be
made subsequent to the date hereof and prior to the Closing Date.
(e) The outstanding shares of Common Stock have been, the shares of
Common Stock to be issued upon the exercise of the Warrants and the Standby
Shares upon issuance will be, and the Standby Shares upon issuance and payment
of the purchase price therefor in accordance with the terms of this Agreement
will be, duly authorized, validly issued, fully paid and nonassessable and are
not and will not be subject to any preemptive or similar right. The description
of the Common Stock in the Registration Statement and the Prospectus is, and at
the Closing Date will be, complete and accurate in all material respects. 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
exercisable for, or any contracts or commitments to issue or sell, any shares of
Common Stock or any such warrants, convertible securities or obligations, except
for options granted and Common Stock issued (which shall be in the ordinary
course of business consistent with past practice) pursuant to the Company's 1995
and 1996 Stock Option Plans.
(f) The Warrants are exercisable into Common Stock until April 11, 2001
or the Redemption Date if the Warrants have been called for redemption at an
exercise price of $5.00 per share. At the close of business on the business day
immediately preceding the date hereof, there were 4,600,000 Warrants
outstanding. On the Redemption Date, the Warrants shall have been duly called
for redemption at the Redemption Price. A copy of the form of Notice of
Redemption will be delivered to the Purchasers.
(g) The financial statements of the Company, together with the related
notes and schedules thereto, included or incorporated by reference in the
Registration Statement or the Prospectus present fairly the financial condition
of the Company, as of the respective dates thereof, and the consolidated results
of operations and cash flows of the Company, for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules of the
Company are required by the Act, the Exchange Act or the Rules and Regulations
to be included in the Registration Statement or the Prospectus. KPMG Peat
Marwick LLP, who have certified such financial statements and schedules, are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations. The statements included in the Registration Statement
with respect to KPMG Peat Marwick LLP pursuant to Rule 509 of Regulation S-K of
the Rules and Regulations are true and correct in all material respects.
(h) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date,
except as set forth in or
-5-
<PAGE>
contemplated by the Registration Statement and the Prospectus, (i) there has not
been and will not have been any change in the capitalization of the Company
(except for the grant or exercise of options or the issuance of Common Stock, in
each case pursuant to the Company's 1995 and 1996 Stock Option Plans or the
exercise of the Warrants, or any material change in the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company, taken as a whole, arising for any reason whatsoever, (ii) the
Company has not incurred nor will it incur any liabilities or obligations,
direct or contingent, that are material to the Company, taken as a whole, nor
has it entered into nor will it enter into any material transactions other than
pursuant to this Agreement and the transactions referred to herein and (iii) the
Company has not and will not have paid or declared any dividends or other
distributions of any kind on any class of its capital stock.
(i) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(j) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its officers or directors in their
capacity as such, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might reasonably
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company,
taken as a whole.
(k) The Company has, and at the Closing Date will have, (i) all
governmental licenses, permits, consents, orders, approvals and other
authorizations required to carry on its business as contemplated in the
Prospectus, except where the failure to have any of the foregoing could not have
a material adverse effect on the Company, taken as a whole, (ii) complied in all
material respects with all laws, regulations and orders applicable to it or its
business and (iii) performed in all material respects all obligations required
to be performed by it, and is not, and at the Closing Date will not be, in
default in any material respect, under any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement, lease,
contract or other agreement or instrument (collectively, a "contract or other
agreement") to which it is a party or by which its property is bound or
affected. To the best knowledge of the Company, no other party under any
contract or other agreement that is material to the Company, taken as a whole,
is in default in any material respect thereunder. The Company is not, nor at the
Closing Date will it be, in violation of any provision of its Certificate of
Incorporation or By-Laws. The Company has not been advised, and has no reason to
believe, that either it is not conducting business in substantial compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations, except where failure to be
so in compliance would not materially adversely affect the condition (financial
or otherwise), business, results of operations or prospects of the Company,
taken as a whole.
-6-
<PAGE>
(l) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Standby Shares by the Company or the shares of Common Stock to be issued upon
the exercise of the Warrants, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc., (the "NASD") in connection with the
purchase and distribution by the Purchasers of the Standby Shares.
(m) The Company has full corporate power and authority to enter into
this Agreement. Each of this Agreement, the Warrants and the Standby Warrants
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding agreement or obligation of the Company and is enforceable
against the Company in accordance with the terms hereof and thereof except to
the extent that the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting generally the enforcement of creditors' rights and
remedies and by general principles of equity. The Company has full corporate
power and authority to call the Warrants for redemption, to exercise and redeem
the Warrants and to issue the Standby Warrants, the Standby Shares and the
shares of Common Stock to be issued upon the exercise of the Warrants and the
Standby Warrants, all as described in the Prospectus, and all such actions have
been duly authorized by the Company. Neither the call of the Warrants for
redemption, the exercise of the Warrants, the redemption of the Warrants, the
performance of this Agreement nor the consummation of the transactions
contemplated hereby will result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or give any other party a right
to terminate any of this obligations under, or result in the acceleration of any
obligation under, the Certificate of Incorporation or By-Laws of the Company,
any contract or other agreement to which the Company or any of its properties is
bound or affected, or violate or conflict with any judgment, ruling, decree,
order, statute, rule or regulation of any court or other governmental agency or
body applicable to the business or properties of the Company.
(n) The Company has good and marketable title to all properties and
assets described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described in the
Prospectus or are not material to the business of the Company, taken as a whole.
The Company has valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company.
(o) There is no document or contract of a character required by the Act
or the Rules and Regulations to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required.
-7-
<PAGE>
Except as set forth in the Prospectus, 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
against the Company in accordance with the terms thereof (except as such
enforceability may be limited by bankruptcy or insolvency law, general
principles of equity, limitations on the enforceability of indemnification
agreements or agreements not to compete, and other similar legal limitations
applicable to contracting parties generally).
(p) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Purchasers was or will be, when made,
inaccurate, untrue or incorrect in any material respect. The Company has not
distributed and will not distribute prior to the Redemption Date any offering
material in connection with the offering and sale of the Standby Shares other
than the Prospectus, the Registration Statement and any other materials
permitted by the Act.
(q) Neither the Company nor, to the best of the Company's knowledge,
any of its directors, officers or controlling persons has taken, directly or
indirectly, any action intended, or which might reasonably be expected, to cause
or result, under the Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the exercise of the Warrants or the sales or resale of the Standby
Shares.
(r) No holder of securities of the Company (other than the holders of
the Unit Purchase Options issued as of April 11, 1994) has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(s) The Company is neither involved in any material labor dispute nor,
to the knowledge of the Company, is any such dispute threatened.
(t) The Company maintains a system of internal accounting controls
sufficient in all material respects to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to demand
deposit accounts is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for inventory is
compared with existing inventory at reasonable intervals and appropriate action
is taken with respect to any differences.
(u) The Company carries, or is covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of its business and the
value of its properties.
(v) The Company is in compliance in all material respects with all
currently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in
-8-
<PAGE>
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(w) To the best of the Company's knowledge, there are no affiliations
with the National Association of Securities Dealers, Inc. among the Company's
officers, directors or 5% or greater securityholders, except as set forth in the
Registration Statement or as otherwise disclosed in writing to the Purchasers.
(x) The Company has the right to use each trademark currently used in
connection with its business as currently and as proposed to be conducted in the
United States, and the Company has not received any notice that its current and
proposed use (in the United States or abroad) of such trademark infringes any
rights of any other party except as set forth in the Prospectus. Except as
disclosed in or specifically contemplated by the Prospectus, the Company has
sufficient trademarks, trade names, patent rights, mask works, copyrights,
licenses, approvals and governmental authorizations to conduct its business as
now conducted; and the Company has no knowledge of any material infringement by
it of trademark, trade name rights, patent rights, mask works, copyrights,
licenses, trade secret or other similar rights of others, and there is no claim
being made against the Company regarding trademark, trade name, patent, mask
work, copyright, license, trade secret or other infringement which may be
reasonably foreseen to have a material adverse effect on the condition
(financial or otherwise), business, results of operations or business prospects
of the Company, taken as a whole.
(y) The Company has complied, and until the completion of the
distribution of the Standby Shares, will comply with all of the provisions of
(including, without limitation, filing all forms required by) Section 517.075 of
the Florida Securities and Investor Protection Act and regulation 3E-900.001
issued thereunder with respect to the offering and sale of the Standby Shares.
The Company has timely and properly filed with the Commission all reports and
other documents required to have been filed with the Commission.
(z) The Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby.
(aa) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid all taxes shown as due thereon;
and the Company has no knowledge of any tax deficiency which has been or may be
reasonably foreseen to be asserted or threatened against the Company which could
materially and adversely affect the business, results of operations or
properties of the Company, taken as a whole.
-9-
<PAGE>
(bb) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
4. AGREEMENTS OF THE COMPANY. The Company agrees with the Purchasers as
follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Standby Shares by the Purchasers or a
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Purchasers within a reasonable period of time prior to the filing thereof and
the Purchasers shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the registration
Statement to become effective, and will notify the Purchasers promptly, and will
confirm such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes effective, (ii)
of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
or the threat thereof, (iv) of the happening of any event during the period
mentioned in the second sentence of Section 4(e) that in the judgment of the
Company makes any statement made in the Registration Statement or the Prospectus
untrue or that requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein, in light of the
circumstances under which they are made, not misleading and (v) of receipt by
the Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any preliminary prospectus or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment.
(c) The Company will furnish to the Purchasers without charge, two
signed copies of the Registration Statement and of any post-effective amendment
thereto, including financial statements and schedules, and all exhibits thereto
(including any document filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus).
(d) The Company will comply with the undertakings contained in the
Registration Statement.
(e) The Company will take all necessary action after the Effective Date
to maintain the effectiveness of the Registration Statement until such time as
the distribution of the Standby Shares has been completed. On the Effective
Date, and thereafter from time to time while the Registration Statement is still
effective, the Company will deliver to the Purchasers, without charge, as many
copies of the Prospectus or any amendment or
-10-
<PAGE>
supplement thereto as the Purchasers may reasonably request in conjunction with
the distribution of the Standby Shares. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Purchasers and by all
dealers to whom the Standby Shares may be sold, both in connection with the
offering or sale of the Standby Shares and for any period of time thereafter
during which the Prospectus is required by law to be delivered in connection
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Purchasers should be set forth in the
Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with the law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto and will deliver to the Purchasers, without charge, such
number of copies thereof as the Purchasers may reasonably request.
(f) Prior to any public offering of the Standby Shares by the
Purchasers, the Company will cooperate with the Purchasers and counsel to the
Purchasers in connection with the registration or qualification of the Standby
Shares and the shares of Common Stock to be issued upon the exercise of the
Warrants for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Purchasers may request; provided, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective Date,
the Company will furnish to the Purchasers copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Purchasers a copy of each annual or other report it shall be
required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or reimburse
if paid by the Purchasers, all costs and expenses incident to the performance of
the obligations of the Company and (subject to the limitations set forth in
clause 11 below) the Purchasers under this Agreement, including but not limited
to costs and expenses of or relating to (1) the preparation, printing and filing
of the Registration Statement and exhibits to it, the Prospectus and any
amendment or supplement to the Registration Statement or the Prospectus, (2) the
preparation, printing, filing and mailing of the Notice of Redemption, (3) the
preparation and delivery of certificates representing the Standby Shares and the
shares of Common Stock to be issued upon the exercise of the Warrants, (4) the
printing of this Agreement and Dealer Agreements, if any, (5) furnishing
-11-
<PAGE>
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto, as may be
reasonably requested for use in connection with the offering and sale of the
Standby Shares by the Purchasers or by dealers to whom Standby Shares may be
sold, (6) the listing of the Standby Shares and the shares of Common Stock to be
issued upon the exercise of the Warrants and the Standby Warrants on the
automated quotation system of the National Association of Securities Dealers,
Inc. ("Nasdaq"), (7) any filings required to be made by the Purchasers with the
NASD, and the fees, disbursements and other charges of counsel for the
Purchasers in connection therewith, (8) the registration or qualification of the
Standby Shares and the shares of Common Stock to be issued upon the exercise of
the Warrants for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the fees,
disbursements and other charges of counsel to the Purchasers in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (9) fees, disbursements and other charges of counsel
to the Company, (10) the transfer agent for the Common Stock and (11) the
Purchasers' out-of-pocket expenses in connection herewith, including without
limitation the fees, disbursements and other charges of its respective counsel
(to the extent not subject to reimbursement as contemplated above), in an
aggregate amount not to exceed $25,000.
(j) If this Agreement shall be terminated by the Company pursuant to
any of the provisions hereof or if for any reason the Company shall be unable to
perform its obligations hereunder, the Company will reimburse the Purchasers for
all reasonable fees, disbursements and other charges of counsel to the
respective Purchasers, in an aggregate amount not to exceed $25,000.
(k) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the Warrants or the
shares of Common Stock to facilitate the exercise of the Warrants or the sale or
resale of any of the Standby Shares.
(l) The Company will apply the net proceeds from the sale to the
Purchasers of the Standby Shares in the manner set forth in the Prospectus under
"Use of Proceeds."
(m) The Company will not and will obtain agreements from its officers
and directors that they will not, for a period of 90 days after the Closing
Date, without the prior written consent of the Purchasers, sell, contract to
sell or otherwise dispose of any shares of Common Stock or rights to acquire
such shares, or register under the Act the public offering, sale or other
distribution of any shares of Common Stock held by third parties, except (i)
pursuant to the 1995 and 1996 Stock Option Plans or in connection with other
employee incentive compensation arrangements, (ii) the Warrant Shares, (iii) for
shares issuable in connection with any stock split or stock dividend and (iv) so
long as such issuance does not involve a public offering during such period, as
consideration for the acquisition of businesses, properties or assets.
(n) The Company will mail or cause to be mailed to the registered
holders of the Warrants the Notice of Redemption, together with a letter of
transmittal, within three days after the expiration of the twenty day period
referred to in the first paragraph of this Agreement.
-12-
<PAGE>
(o) The Company will advise the Purchasers on each business day prior
to the Redemption Date of the number of Warrants exercised on the preceding
business day.
(p) The Company shall take no action the effect of which would be to
require an adjustment of the exercise price of the Warrants from the exercise
price set forth in Section 3(f).
(q) Prior to such time as the Purchasers shall have advised the Company
that the offering and sale of the Standby Shares by the Purchasers contemplated
by this Agreement shall have been completed, the Company shall not withdraw or
apply for the withdrawal of the Registration Statement and the Company shall
timely file all documents, and any amendments of previously filed documents,
required to be filed by it pursuant to the Act and the Exchange Act as are
necessary to maintain the effectiveness of the Registration Statement; provided,
however, that the Purchasers shall (i) complete the distribution of the Standby
Shares contemplated by this Agreement as soon as commercially reasonable, in
Purchasers' reasonable judgment, (ii) notify the Company of the completion of
such distribution promptly following such completion and (iii) notify the
Company from time to time, upon the reasonable request of the Company, of how
many Standby Shares have not yet been distributed by the Purchasers.
5. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS.
The obligations of the Purchasers hereunder are subject to the
following conditions:
(a) The Notice of Redemption shall have been given to all
Warrantholders as contemplated herein and in the Warrants.
(b) Notification that the Registration Statement has become effective
shall be received by the Purchasers not later than 5:00 p.m., Eastern time, on
the date and time as shall be consented to in writing by the Purchasers and all
filings required by Rule 424 of the Rules and Regulations shall have been made
within the time required by such rule.
(c) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Standby Shares or the shares of Common Stock to be issued upon the
exercise of the Warrants under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Purchasers and the Purchasers did not object
thereto in good faith, and the Purchasers shall have
-13-
<PAGE>
received certificates, dated the Closing Date and signed by the Chief Executive
Officer of the Company and the Chief Financial Officer of the Company.
(d) At the Closing Date, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
shall not have been a material adverse change in the general affairs, business,
business prospectus, properties, management, condition (financial or otherwise)
or results of operations of the Company, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus, and (ii) the Company shall not have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, which
is not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Purchasers any such development makes it impracticable or
inadvisable to proceed with the transactions contemplated hereby on the terms
and in the manner contemplated by the Prospectus.
(e) At the Closing Date, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the Company
or any of its officers or directors in their capacities as such, before or by
any Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, that might reasonably
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company,
taken as a whole.
(f) Each of the representations and warranties of the Company contained
herein shall be true and correct at the Closing Date, as if made at the Closing
Date, and all covenants and agreements herein contained to be performed on the
part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date shall have been
duly performed, fulfilled or complied with.
(g) The Purchasers shall have received an opinion, dated the Effective
Date and the Closing Date and reasonably satisfactory in form and substance to
counsel for the Purchasers, from Cooperman Levitt Winikoff Lester & Newman,
P.C., counsel to the Company, to the effect set forth in Exhibit B attached
hereto.
(h) The Purchasers shall have received an opinion, dated the Effective
Date and the Closing Date, from Piper & Marbury L.L.P., counsel to the
Purchasers, with respect to the Registration Statement, the Prospectus and this
Agreement, which opinions shall be satisfactory in all respects to the
Purchasers.
(i) Concurrently with the execution and delivery of this Agreement,
KPMG Peat Marwick LLP shall have furnished to the Purchasers a letter, dated the
date hereof,
-14-
<PAGE>
addressed to the Purchasers and in form and substance reasonably satisfactory to
the Purchasers confirming that they are independent accountants with respect to
the Company as required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and numerical information
contained in the Registration Statement or incorporated by reference therein. At
the Closing Date, KPMG Peat Marwick LLP shall have furnished to the Purchasers a
letter, dated the Closing Date, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter from KPMG Peat Marwick
LLP, that nothing has come to their attention during the period from the date of
the letter referred to in the prior sentence to a date (specified in the letter)
not more than two days prior to the Closing Date which would require any change
in their letter dated the date hereof if it were required to be dated and
delivered at the Closing Date.
(j) At the Closing Date that shall be furnished to the Purchasers an
accurate certificate, dated the Closing Date, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance reasonably satisfactory to the Purchasers, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any
documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus) and (A) as of
the date of such certificate, to the best of its knowledge,
such documents are true and correct in all material respects
and do not omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein not untrue or misleading and (B) since the Effective
Date, no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to
make the statements therein not untrue or misleading in any
material respect and there has been no document required to
be filed under the Exchange Act and the Exchange Act Rules
and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not
been so filed.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and
correct.
(iii) Each of the covenants required by this Agreement to be
performed by the Company on or prior to the date of such
certificate has been duly, timely and fully performed and
each condition herein required to be complied with by the
Company on
-15-
<PAGE>
or prior to the date of such certificate has been duly,
timely and fully complied with.
(k) The Standby Shares and the shares of Common Stock to be issued upon
the exercise of the Warrants shall be qualified for sale in such states as the
Purchasers may reasonably request, and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing
Date.
(l) Prior to the Closing Date, the Standby Shares and the shares of
Common Stock to be issued upon the exercise of the Warrants and the Standby
Warrants will have been listed on Nasdaq.
(m) The Company shall have furnished to the Purchasers such
certificates, in addition to those specifically mentioned herein, as the
Purchasers may have reasonably requested as to the accuracy and completeness at
the Closing Date of any statement in the Registration Statement or the
Prospectus or any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, as to the accuracy at the Closing
Date of the representations and warranties of the Company herein, as to the
performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Purchasers.
(n) The Company shall have sold to the Purchasers, or their designees,
warrants to purchase an aggregate of 500,000 shares of Common Stock for an
aggregate purchase price of $500.00. The warrants shall be exercisable after one
(1) year and during the remaining four (4) years of the five (5) year term
thereof at an exercise price per share equal to $10.00 as to one-half of such
warrants and $12.50 as to the other half of such warrants. The warrants are to
be in the form attached as an exhibit to the Registration Statement and shall
include standard anti-dilution protection and provide that the Company shall, at
its own cost and expense, include the warrants and the shares of Common Stock
purchasable upon exercise thereof in any registration statement (other than one
relating solely to employee stock option or stock purchase plans or to a Rule
145 transaction) filed by the Company during the seven (7) year period after the
date of this Agreement and shall file, upon written request of the
warrantholders and at the Company's expense, no more than two (2) registration
statements as may be appropriate to cover a public offering of the shares
underlying the warrants.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Purchasers
and each person, if any, who controls the Purchasers within the meaning of the
Act against any losses, claims, damages, liabilities or expenses, joint or
several, to which the Purchaser or such controlling person may become subject,
under the Act, the Exchange Act, or other federal or state statutory law or
regulations, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based upon
any untrue statement or alleged untrue statement of any
-16-
<PAGE>
material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, or arise out of or are based upon in whole or in
part any inaccuracy in the representations and warranties of the Company
contained herein or any failure of the Company to perform its obligations
hereunder or under law; and will reimburse the Purchasers and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by the Purchasers or such controlling person in connection
with investigating, defending settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by each of the Purchasers
relating to such Purchaser expressly for the inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. In addition to its
other obligations under this subparagraph (a), the Company agrees that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company herein or failure of the Company to perform its
obligations hereunder, all as described in this subparagraph (a), it will
reimburse the Purchasers on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Purchasers for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Purchasers shall
promptly return it to the Company together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by
Citibank, N.A., New York,. New York (the "Prime Rate"). Any such interim
reimbursement payments which are not made to the Purchasers within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to any liability
which the Company may otherwise have. The Company will not, without the prior
written consent of the Purchasers, settle or compromise or consent to the entry
of any judgment in any pending or threatened action or claim or related cause of
action or portion of such cause of action in respect of which indemnification
may be sought hereunder (whether or not the Purchasers are parties to such
action or claim), unless such settlement, compromise or consent includes an
unconditional release of the Purchasers and any person who controls the
Purchasers from all liability arising out of such action or claim (or related
cause of action or portion thereof).
(b) Each of the Purchasers will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and each person,
-17-
<PAGE>
if any, who controls the Company within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the company, or any
such director, officer, or controlling person may become subject, under the Act,
the Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Purchasers), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with information
furnished in writing to the Company by the indemnifying Purchaser relating to
such Purchaser expressly for the use in the Registration Statement, any
preliminary prospectus relating to such Purchaseor the Prospectus; and will
reimburse the Company, or any such director, officer, or controlling person for
any legal and other expense reasonably incurred by the company, or any such
director, officer, or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. In addition to their other obligations under this
subparagraph (b), each of the Purchasers agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this subparagraph (b) which relates
to such information furnished to the Company by such Purchaser, it will
reimburse the Company (and, to the extent applicable, each officer, director or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of such
Purchaser's obligation to reimburse the Company (and, to the extent applicable,
each officer, director or controlling person) for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is to held to have been improper, the Company (and, to the
extent applicable, each officer, director or controlling person) shall promptly
return it to such Purchaser together with interest, compounded daily, determined
on the basis of the Prime Rate. Any such interim reimbursement payments which
are not made to the Company within 30 days of a request for reimbursement, shall
bear interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which each Purchaser may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying
-18-
<PAGE>
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party and
the indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Purchasers in the case of paragraph (a),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 6 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under subparagraphs (a), (b)
or (c) in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company and
the Purchasers from persons other than the Company and the Purchasers, such as
persons who control the Company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company who
also may be liable for contribution) (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Purchasers from
the offering of the Standby Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Purchasers in
connection with the statements or omissions
-19-
<PAGE>
or inaccuracies in the representations and warranties herein which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the sale of the Standby Shares
(before deducting expenses) received by the Company bear to the total
compensation (after deducting therefrom loses, if any, incurred in reselling
Standby Shares) received by the Purchasers hereunder. The relative fault of the
Company and the Purchasers shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or the Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (c) of
this Section 6, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 6 with respect to
notice of commencement of any actions shall apply if a claim for contribution is
to be made under this subparagraph (d); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under subparagraph (c) for purposes of indemnification. The Company and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 6 were determined solely by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in this Section. Notwithstanding the provisions of
this Section 6, the Purchasers shall not be required to contribute any amount in
excess of the amount of compensation (after deducting therefrom losses, in any,
incurred in reselling the Standby Shares) received by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in subparagraphs 6(a) and 6(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in subparagraphs 6(a) and 6(b)
hereof and would not resolve the ultimate property or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
subparagraphs 6(a) and 6(b) hereof.
-20-
<PAGE>
7. TERMINATION.
(a) The obligations of the Purchasers under this Agreement may be terminated at
any time on or prior to the Closing Date, by notice to the Company from the
Purchasers, without liability on the part of the Purchasers to the Company, if,
prior to delivery and payment for the Standby Shares, (i) trading in any of the
equity securities of the Company shall have been suspended by the Commission, by
an exchange that lists the Common Stock or by the National Association of
Securities Dealers Automated Quotation Market System, (ii) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market System shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or any court or other governmental
authority, (iii) a general banking moratorium shall have been declared by either
Federal or New York State authorities (iv) any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration of the United States of a national
emergency or war or other calamity or crisis shall have occurred, (v) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority shall have occurred
which in the Purchasers' opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company, (vi)
any downgrading in the rating of the Company's debt securities shall have been
effected by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Exchange Act), (vii) any
governmental body or agency shall have taken any action in respect of its
monetary or fiscal affairs, the effect of any of which is such as to make it, in
the sole judgment of the Purchaser, impracticable or inadvisable to proceed with
the transactions contemplated hereby on the terms and in the manner contemplated
by the Prospectus, (viii) the Notice of Redemption shall not have been given to
Warrantholders on or before December 31, 1996 or (ix) the National Association
of Securities Dealers, Inc. shall have required that the aggregate underwriters'
compensation payable under this Agreement to be reduced.
(b) This Agreement shall expire automatically on December 31, 1996 unless, prior
thereto, the Notice of Redemption shall have been given to the Warrantholders.
Upon the expiration of this Agreement, neither the Company nor the Purchasers
shall have any further rights or obligations hereunder except as may be
expressly contemplated herein.
8. EXERCISE OF WARRANTS.
The Purchasers agree that any Warrants beneficially owned by them
(including Warrants purchased as contemplated in Section 2(c)) will be exercised
prior to the Redemption Date.
-21-
<PAGE>
9. COMPENSATION UPON TERMINATION OF AGREEMENT.
In the event that this Agreement is terminated pursuant to Section 7
hereof, the Company shall pay the Purchasers, in lieu of any compensation
provided for in any previous agreements between the Company and the Purchasers
relating to solicitation of the Warrants, (a) a fee equal to $.15 per Warrant
for each Warrant exercised prior to the termination of this Agreement together
with warrants in a form identical to the Standby Warrants to purchase such
number of shares of Common Stock which equals the product of (i) 500,000 and
(ii) the number of Warrants exercised prior to such termination divided by
4,600,000 and (b) a fee equal to $.125 per Warrant for each Warrant exercised
after the termination of this Agreement. Such compensation should be divided
equally between the Purchasers.
10. UNIT PURCHASE OPTIONS.
Notwithstanding the provisions of Section 6.2 of the Unit Purchase Options
issued on April 11, 1994, the Warrants underlying such Unit Purchase Options
shall not be redeemable by the Company in accordance with the terms of the
Purchase Warrant Agreement.
11. MISCELLANEOUS.
Notice given pursuant to any of the provisions of this Agreement shall be
in writing and, unless otherwise specified, shall be mailed, delivered,
telecopied, telegraphed and confirmed (a) if to the Company, 14000 N.W. 4
Street, Sunrise, Florida 33325, Attention: Zivi R. Nedivi, Chief Executive
Officer and President, or (b) if to the Purchasers, Brean Murray, Foster
Securities Inc., 633 Third Avenue, New York, New York 10017, Attention: A. Brean
Murray, Chairman and GKN Securities Corp., 61 Broadway, New York, New York
10006, Attention: David Nussbaum, Chairman. Any such notice shall be effective
only upon receipt.
This Agreement has been and is made solely for the benefit of the
Purchasers and the Company and of the controlling persons, directors and
officers referred to in Section 6, and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Warrant Shares from the Purchaser.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Purchasers each hereby irrevocably waive any right they
may have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of the
Purchasers or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Standby Shares
under this Agreement.
-22-
<PAGE>
Please confirm that the foregoing correctly sets forth the Standby
Agreement between the Company and the Purchaser.
Very truly yours
KELLSTROM INDUSTRIES, INC.
By: /s/
----------------------
Zivi R. Nedivi
Chief Executive Officer
Confirmed as of the date first above mentioned:
BREAN MURRAY, FOSTER SECURITIES INC.
By: /s/
-------------------------
A. Brean Murray
Chairman
GKN SECURITIES CORP.
By: /s/
-------------------------
David Nussbaum
Chairman
-23-
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE
OF INCORPORATION OF
ISRAEL TECH ACQUISITION CORP.
UNDER SECTION 242 OF THE GENERAL CORPORATION LAW
Israel Tech Acquisition Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: Pursuant to Section 242 of the Delaware General Corporation Law,
the Board of Directors of the Corporation, pursuant to a Meeting on May 10,
1995, duly adopted the following resolution which was duly approved by the
stockholders owning a majority of the outstanding stock of the Corporation
entitled to vote thereon on June 22, 1995.
RESOLVED, that it is hereby proposed and declared advisable that Articles
First and Sixth of the Restated Certificate of Incorporation of the
Corporation be amended to read their entirety as follows:
"FIRST: The Name of the Corporation is Kellstrom Industries, Inc."
"SIXTH: Directors shall be divided into two classes. At each annual
meeting of stockholders, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at the second
succeeding annual meeting of stockholders after their election. Except as the
GCL may otherwise require, in the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling
of any vacancy in that connection, newly created directorships and any
vacancies in the Board of Directors, including unfilled vacancies resulting
from the removal of directors for cause, may be filled by the vote of a
majority of the remaining Directors then in office, although less than a quorum,
or by the sole remaining Director. All Directors shall hold office until the
expiration of their respective terms of office and until their successors shall
have been elected and qualified."
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed, under penalties
of perjury by YOAV STERN, its CO-CHIEF EXECUTIVE OFFICER and attested to by
David Jan Mitchell, its Secretary, this 22nd day of June, 1995.
ISRAEL TECH ACQUISITION CORP.
ATTEST: By: /s/ YOAV STERN
------------------------
Name: Yoav Stern
Title: Co-Chief Executive Officer
By: /s/ DAVID JAN MITCHELL
----------------------
David Jan Mitchell
Secretary
(CORPORATE SEAL)
EXHIBIT 10.2
MARKETING, MANAGEMENT AND CONSULTING SERVICES
AGREEMENT
MARKETING, MANAGEMENT AND CONSULTING SERVICES AGREEMENT, dated February 3,
1995, between Israel Tech Acquisition Corp., a Delaware corporation with
offices at 101 E. 52ND ST., NY, NY 10022 ("ITAC"), and Rada Electronic
Industries Ltd., an Israeli corporation with offices at Medinat Hayehudim 12,
P.O.B. 2059, Herzlia, Israel ("Rada").
RECITALS
A. Concurrently herewith, ITAC is entering into an agreement in principle
("Agreement in Principle") which contemplates the preparation, delivery and
execution of a definitive purchase agreement with Rada and/or one more of Rada's
affiliated entities (the "Purchase Agreement") pursuant to which ITAC would
acquire the business of Kellstrom Industries, Inc. ("Kellstrom"), an indirect
subsidiary of Rada which is engaged in the trade of jet engines and jet
engine parts.
B. One of ITAC's business objectives is to establish operations in
Israel which would be compatible with, and complementary to, Kellstrom's
business.
C. Towards that end, ITAC intends to explore the possibility of
establishing, among others, jet engine refurbishing facilities in Israel,
desires to market Kellstrom's services as a broader based business, and has
requested that Rada use its best efforts to assist ITAC and Kellstrom with
respect to such contemplated Israeli operations and marketing efforts.
D. Rada is in need of, and desires to retain ITAC to provide it with,
certain management and consulting services, and ITAC is prepared to provide
Rada with such services, as more particularly described herein.
The parties agree as follows:
1. MARKETING ASSISTANCE TO BE PROVIDED BY RADA. From time to time
as shall be requested by the Board of Directors of ITAC or by its Chief
Executive Officer, Rada shall provide ITAC and Kellstrom with advice and
assitance in marketing Kellstrom's services in the United States, Israel and
other countries. Compensation payable to Rada for such marketing advice and
assistance, and the payment terms thereof, shall be agreed to by the parties on
an AD HOC basis at the time of each such request for services.
<PAGE>
2. MANAGEMENT AND CONSULTING SERVICES TO BE PROVIDED BY ITAC.
(a) From time to time as shall be requested by the Board of
Directors of Rada, ITAC shall provide Rada with management and consulting
services on matters relating to strategic and financial planning.
(b) In connection with the foregoing, ITAC shall use its best
efforts to make available to Rada the personal services of Joram Rosenfeld,
Yoav Stern and Zivi Nedivi, on a part time basis and on an "as available" basis.
The parties acknowledge and agree that ITAC shall be in compliance with the
foregoing if the services of any one of such individuals are made available to
Rada by ITAC for such purposes.
(c) In consideration for ITAC making its personnel available to
Rada pursuant to this Agreement, Rada shall pay ITAC an annual fee (the
"Management Fee") of Two Hundred Thousand Dollars ($200,000). Such Management
Fee shall be payable as follows:
(i) Ten Thousand Dollars ($10,000), to be credited to the
initial Management Fee, shall be paid by Rada to ITAC upon the
execution of this Agreement.
(ii) One Hundred Ninety Thousand Dollars ($190,000),
representing the balance of the initial Management Fee, shall be paid
by Rada to ITAC upon the closing of the transactions contemplated by
the Purchase Agreement.
(iii) Each subsequent Management Fee shall be paid in full by
Rada to ITAC in advance on each anniversary of this Agreement.
3. TERM.
(a) The term of this Agreement shall commence on the date hereof
and expire at the close of business on February ____, 2000.
(b) Notwithstanding the foregoing, if the transactions
contemplated by the Agreement in Principle and, if executed, the Purchase
Agreement, shall not close, this Agreement shall terminate as of the effective
date of the termination of the Agreement in Principle or the Purchase Agreement,
as the case may be and the portion of the initial Management Fee theretofore
paid to ITAC shall be refunded by ITAC to Rada.
-2-
<PAGE>
4. DESIGNATION OF RADA DIRECTOR NOMINEES. For so long as this
Agreement is in effect, ITAC shall have the right to designate for nomination
by Rada's Board of Directors, for election by Rada's shareholders, two (2)
members of the Board of Directors of Rada. The initial designees of ITAC on
Rada's Board of Directors (the "Initial Designees") shall be Joram Rosenfeld
and Yoav Stern. Should either Initial Designee resign from such position, ITAC
shall thereafter have the right to so designate only one (1) director for
election to Rada's Board of Directors, which designee shall be selected by ITAC
in its sole discretion, and Rada shall not unreasonably withhold its consent to
the selection of said nominee. Any director(s) so nominated by ITAC to the Board
of Directors of Rada who are elected to so service shall be entitled to the same
benefits as any other director of Rada who is not a "public shareholder
representative" (as defined under Israeli law).
5. VOTING OF RADA SHARES. For so long as this Agreement is in
effect, ITAC shall vote any shares of Rada capital stock then hold by ITAC in
support of any Rada shareholder action recommended by the Board of Directors
of Rada.
6. RELATIONSHIP OF PARTIES. ITAC and Rada acknowledge and agree that
each party is an independent contractor and not a joint venturer with, or
partner of, the other and that the relationship between the parties is not
intended to be that of joint venture or partnership.
7. NON-DISCLOSURE. Neither party shall disclose or furnish to any
other person, firm or corporation, except to the extent required by law or by
order of any court or govermental agency, (a) any information relating to any
confidential process, technique or procedure used by the other party which is
not a matter of public record or generally known by competing entities; or (b)
any information relating to the operations or financial status of the other
party, including, without limitation, all financial data and sources of
financing, which is not specifically a matter of public record; or (c) any
information of a confidential nature obtained as a result of any prior, present
of future relationship with the other party, which is not specifically a matter
of public record and not generally known by competing entities; or (d) any trade
secrets of the other party.
In the event that either party shall breach any of the provisions
of this Section 7, or in the event that any such breach is threatened by either
party, in addition to and without limiting or waiving any other remedies
available to the other party at law or in equity, the other party shall be
entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, to restrain any such breach or
threatened breach and to enforce the provisions of this
-3-
<PAGE>
Section 7. Each party acknowledges and agrees that there is no adequate remedy
at law for any such breach or threatened breach and, in the event that any
proceeeding is brought seeking injunctive relief, such party shall not use as a
defense thereto that there is an adequate remedy at law.
8. ASSIGNMENT. The rights and obligations of either party under this
Agreement may not be assigned without the prior written consent of the other
party.
9. BINDING EFFECT. This Agreement shall extend to and be binding
upon the parties and shall inure to the benefit of their respective successors
and permitted assigns.
10. NOTICES. Any notice required or permitted to be given under this
Agreement to either party shall be sufficient if in writing and if sent by
telecopier or by registered or certified mail, postage prepaid, return receipt
requested, to the address of such party hereinabove set forth, or to such other
address as such party may hereafter designate by a notice given to the other
party in the manner provided in this Section.
11. WAIVER. A waiver by a party hereto of a breach of any term,
covenant or condition of this Agreement by the other party hereto shall not
operate or be construed as a waiver of any other or subsequent breach by such
party of the same or any other term, covenant or condition hereof.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and no waiver,
modification, change or amendment of any of its provisions shall be valid
unless in writing and signed by the party against whom such claimed waiver,
modification, change or amendment is sought to be enforced.
13. AUTHORITY. Each party represents and warrants to the other party
that it has the power, authority and right to enter into this Agreement and to
carry out and perform the terms, covenants and conditions hereof.
14. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of New York
without giving effect to principles relating to conflicts of law.
15. SEVERABILITY. In the event that any of the provisions of this
Agreement, or any portion thereof, shall be held to be invalid or unenforceable,
the validity and enforceability of the remaining provisions hereof shall not be
affected or impaired but shall remain in full force and effect.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ISRAEL TECH ACQUISITION CORP.
By: /s/ J. ROSENFELD
------------------------------
Name: Joram D. Rosenfeld
----------------------------
Title: CO-CHIEF EXECUTIVE OFFICER
---------------------------
RADA ELECTRONIC INDUSTRIES LTD.
By: /s/ HAIM NISSENSON
------------------------------
Name: Haim Nissenson
----------------------------
Title: Chairman
---------------------------
-5-
EXHIBIT 10.4
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1, dated as of April 18, 1996, to the Employment Agreement,
dated as of June 9, 1995 (the "Employment Agreement"), between Kellstrom
Industries, Inc. , a Delaware corporation (the "Company"), and Zivi R. Nedivi
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company as its President and Chief
Executive Officer pursuant to the terms and provisions contained in the
Employment Agreement;
WHEREAS, the Company desires to indemnify the Executive in order to assure the
Executive that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Executive hereby agree as follows:
1. INDEMNIFICATION. If the Executive acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Executive had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Executive and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal) ,
judgments, settlements (subject to the last sentence of paragraph 3 hereof) ,
fines, court costs and other expenses of any kind or nature whatsoever,
including, without limitation, attorneys' fees and disbursements (collectively,
"Losses"), which may be threatened against, incurred or suffered by the
Executive or his heirs and legal representatives in connection with, relating to
or arising out of, directly or indirectly, the Executive's performance, duties
and responsibilities to, for and on behalf of, the Company, including, without
limitation, (i) the Employment Agreement and all actions or omissions taken
thereunder and (ii) any acts, omissions or alleged acts or omissions arising out
of the Executive's activities on behalf of the Company or in furtherance of the
interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Executive
if the Loss incurred by the Executive (i) arises out of an action brought
directly by the Company against the Executive or (ii) arises, directly or
indirectly, as a result of the Executive being terminated for cause (as such
term is defined in the Employment Agreement).
<PAGE>
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Executive pursuant to which the Executive is entitled
to indemnification, the Company shall have the right to assume the defense of
such claim, including the employment of counsel of its choice. Although the
Executive shall have the right to employ his own counsel, the fees and expenses
of such counsel shall be at the expense of the Executive. The Company shall not
be liable for any settlement of any claim or action effected without its written
consent, PROVIDED that such consent was not unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Executive, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Executive shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Amendment No. 1 shall
inure to the benefit of and be binding upon the Company and its successors and
assigns and the heirs and legal representatives of the Executive. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Amendment by operation of law, or otherwise.
6. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
provisions contained herein shall not constitute an amendment of any term or
provision of the Employment Agreement, and all such terms and conditions shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.
7. AMENDMENT. This Amendment No. 1 may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
8. COUNTERPARTS. This Amendment No. 1 may be executed in counterparts, each
of which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
9. CAPTIONS. The captions of this Amendment No. 1 are not part of the
provisions hereof and shall have no force and effect.
10. GOVERNING LAW. This Amendment No. 1 shall be governed by and construed
in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By: /s/ ANTHONY MOTISI
-------------------------
Name: Anthony Motisi
Title: Vice President
EXECUTIVE
/s/ ZIVI R. NEDIVI
------------------------
EXHIBIT 10.6
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1, dated as of April 18, 1996, to the Employment Agreement,
dated as of May 18, 1995 (the "Employment Agreement"), between Kellstrom
Industries, Inc. , a Delaware corporation (the "Company"), and John S. Gleason
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company as its Chief Financial Officer
pursuant to the terms and provisions contained in the Employment Agreement;
WHEREAS, the Company desires to indemnify the Executive in order to assure the
Executive that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Executive hereby agree as follows:
1. INDEMNIFICATION. If the Executive acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Executive had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Executive and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal),
judgments, settlements (subject to the last sentence of paragraph 3 hereof),
fines, court costs and other expenses of any kind or nature whatsoever,
including, without limitation, attorneys' fees and disbursements (collectively,
"Losses") , which may be threatened against, incurred or suffered by the
Executive or his heirs and legal representatives in connection with, relating to
or arising out of, directly or indirectly, the Executive's performance, duties
and responsibilities to, for and on behalf of, the Company, including, without
limitation, (i) the Employment Agreement and all actions or omissions taken
thereunder and (ii) any acts, omissions or alleged acts or omissions arising out
of the Executive's activities on behalf of the Company or in furtherance of the
interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Executive
if the Loss incurred by the Executive (i) arises out of an action brought
directly by the Company against the Executive or (ii) arises, directly or
indirectly, as a result of the Executive being terminated for cause (as such
term is defined in the Employment Agreement).
<PAGE>
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Executive pursuant to which the Executive is entitled
to indemnification, the Company shall have the right to assume the defense of
such claim, including the employment of counsel of its choice. Although the
Executive shall have the right to employ his own counsel, the fees and expenses
of such counsel shall be at the expense of the Executive. The Company shall not
be liable for any settlement of any claim or action effected without its written
consent, PROVIDED that such consent was not unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Executive, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Executive shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Amendment No. 1 shall
inure to the benefit of and be binding upon the Company and its successors and
assigns and the heirs and legal representatives of the Executive. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Amendment by operation of law, or otherwise.
6. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
provisions contained herein shall not, constitute an amendment of any term or
provision of the Employment Agreement, and all such terms and conditions shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.
7. AMENDMENT. This Amendment No. 1 may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
8. COUNTERPARTS. This Amendment No. 1 may be executed in counterparts, each
of which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
9. CAPTIONS. The captions of this Amendment No. 1 are not part of the
provisions hereof and shall have no force and effect.
10. GOVERNING LAW. This Amendment No. 1 shall be governed by and construed
in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By:/s/ ZIVI R. NEDIVI
---------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
EXECUTIVE
/s/ JOHN S. GLEASON
------------------------------
EXHIBIT 10.8
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1, dated as of April 18, 1996, to the Employment Agreement,
dated as of June 2, 1995, (the "Employment Agreement"), between Kellstrom
Industries, Inc. , a Delaware corporation (the "Company"), and Anthony Motisi
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company as its Vice President -
Operations pursuant to the terms and provisions contained in the Employment
Agreement;
WHEREAS, the Company desires to indemnify the Executive in order to assure the
Executive that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Executive hereby agree as follows:
1. INDEMNIFICATION. If the Executive acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Executive had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Executive and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal),
judgments, settlements (subject to the last sentence of paragraph 3 hereof),
fines, court costs and other expenses of any kind or nature whatsoever,
including, without limitation, attorneys, fees and disbursements (collectively,
"Losses"), which may be threatened against, incurred or suffered by the
Executive or his heirs and legal representatives in connection with, relating to
or arising out of, directly or indirectly, the Executive's performance, duties
and responsibilities to, for and on behalf of, the Company, including, without
limitation, (i) the Employment Agreement and all actions or omissions taken
thereunder and (ii) any acts, omissions or alleged acts or omissions arising out
of the Executive's activities on behalf of the Company or in furtherance of the
interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Executive
if the Loss incurred by the Executive (i) arises out of an action brought
directly by the Company against the Executive or (ii) arises, directly or
indirectly, as a result of the Executive being terminated for cause (as such
term is defined in the Employment Agreement).
<PAGE>
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Executive pursuant to which the Executive is entitled
to indemnification, the Company shall have the right to assume the defense of
such claim, including the employment of counsel of its choice. Although the
Executive shall have the right to employ his own counsel, the fees and expenses
of such counsel shall be at the expense of the Executive. The Company shall not
be liable for any settlement of any claim or action effected without its written
consent, provided that such consent was not unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Executive, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Executive shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Amendment No. 1 shall
inure to the benefit of and be binding upon the Company and its successors and
assigns and the heirs and legal representatives of the Executive. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Amendment by operation of law, or otherwise.
6. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
provisions contained herein shall not constitute an amendment of any term or
provision of the Employment Agreement, and all such terms and conditions shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.
7. AMENDMENT. This Amendment No. 1 may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
8. COUNTERPARTS. This Amendment No. 1 may be executed in counterparts, each
of which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
9. CAPTIONS. The captions of this Amendment No. 1 are not part of the
provisions hereof and shall have no force and effect.
10. GOVERNING LAW. This Amendment No. 1 shall be governed by and construed
in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By:/s/ ZIVI R. NEDIVI
-------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
EXECUTIVE
/s/ ANTHONY MOTISI
----------------------------
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Agreement is entered into as of January 30, 1996 between Kellstrom
Industries, Inc. (formerly Israel Tech Acquisition Corp.), a Delaware
corporation, having its principal place of business at Sawgrass International
Corporate Park, 14000 Northwest Fourth Street, Sunrise, Florida 33325 (the
"Company"), and Paul F. Steele, residing at 9203B Boca Garden Circle South, Boca
Raton, Florida, 33496 (the "Executive").
WITNESSETH:
WHEREAS, the Executive has assumed duties of a responsible nature to the
benefit of the Company and its Board of Directors; and
WHEREAS, the Board of Directors of the Company believes it to be in the
best interests of the Company to enter into this Agreement to assure the
Executive's continuing services to the Company and to diminish any distraction
on the part of the Executive resulting from personal uncertainties and risks
associated with assuming this position;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS.
(a) The "Agreement" shall mean this Employment Agreement between the
Company and the Executive.
(b) The "Board" shall mean the Board of Directors of the Company.
(c) A "Change of Control" shall mean (i) any transaction that has the
result that stockholders of the Company immediately before such transaction
cease to own at least 51% of (x) the voting stock of the Company or (y) of any
entity that results from the participation of the Company in a reorganization,
liquidation or any other form of corporate transaction; (ii) a merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive; or (iii) a sale, lease, exchange or other disposition of all
or substantially all the property and assets of the Company.
<PAGE>
(d) The "Company" shall mean Kellstrom Industries, Inc. (formerly Israel
Tech Acquisition Corp.), a Delaware corporation.
(e) "Dependents" shall mean the Executive's spouse and children, if any.
(f) The "Effective Date" shall mean January 1, 1996.
(g) The "Employment Period" shall mean the period commencing on the
Effective Date and ending on the fifth anniversary of the Effective Date.
(h) The "Executive" shall mean Paul F. Steele.
(i) The "Health Insurance" shall mean such health insurance as is
available to other contract employees of the Company.
(j) The "Loan" shall have the meaning set forth Section 3(d) of this
Agreement.
(k) The "Pension Plan" shall have the meaning set forth is Section 3(c)
(i) of this Agreement.
(l) The "Salary" shall mean the amount set forth in Section 3(b) of
this Agreement.
2. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive
in his employ, and the Executive hereby agrees to remain in the employ of the
Company, for the duration of the Employment Period under the terms and
conditions provided herein. This Agreement shall terminate at the end of the
Employment Period, unless it is terminated prior to the end of the Employment
Period by virtue of one of the provisions of Section 5 of this Agreement.
3. TERMS OF EMPLOYMENT
(a)POSITION AND DUTIES. During the Employment Period the Executive's
position shall be the Vice President - Purchasing. The Executive's services
shall be performed at the Company's headquarters or a location where a
substantial activity for which the Executive has responsibility is located.
(b) COMPENSATION.
2
<PAGE>
(i) BASE SALARY. As of the Effective Date of the Agreement, the
Executive's annual salary (the "Salary") shall be $130,000. During the
Employment Period, the Executive's Salary may be reviewed and changed; however,
the Company shall not pay the Executive a Salary less than $130,000 during the
Employment Period. Any increase in the Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement.
(ii) ANNUAL BONUS. For each calendar year commencing with the year
ending December 31, 1996, at the end of which the Executive is employed by the
Company as its Vice-President:
(A) if the Company has Net Income (as defined below) for such year
of an amount equal to the target net income before taxes (such net
income to be determined by eliminating the effect of any intercompany
transactions prior to the closing date of the Acquisition and any
deductions from net income in respect of transaction expenses related to
the Acquisition), determined in accordance with generally accepted
accounting principles in the U.S. as in effect from time to time (the
"Net Income") as approved by the board of directors of the Company (or
the Executive Committee of the Board, if one exists) for such year (the
"Target"), the Executive shall be entitled to a bonus in an amount equal
to $50,000.
(B) if the Company has Net Income for such year of more than the
Target and less than 150% of the Target, the Executive shall be entitled
to a bonus as calculated below;
B = $50,000 + $50,000 X (NI - T)
--------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net income for such year.
(C) if the company has Net Income for such year of 150% of the
Target or more, the Executive shall be entitled to a bonus of $75,000.
3
<PAGE>
(D) if the Company has Net Income for such year of less than 50% of
the Target, the Executive shall not be entitled to a bonus.
(E) if the Company has Net Income for such year of at least 50% of
the Target but less than the Target, the Executive shall be entitled to
a bonus as calculated below:
B = $50,000 - ($50,000 x 2 X (T - NI))
-------------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
(c) BENEFITS. In addition to the compensation payable to the Executive
as set forth in Section 3(b) above, during the Employment Period the Executive
shall be eligible to participate in the following:
(i) PENSION PLAN. The Company has established and continue for the
Executive an accumulating life insurance plan/pension plan to which
the Company shall contribute $11,000 annually (the "Pension Plan"). The
Executive hereby agrees to assign the benefits of the Pension Plan to
the Company, which assignment shall terminate at such time as the Loan
has been paid in full, or until November 1, 1996, whichever is earlier.
(ii) HEALTH INSURANCE. The Company shall provide the Health
Insurance for the Executive and his Dependents that it provides to other
contract employees of the Company. The provision of the Health Insurance
shall be subject to acceptance by the insurance company of the Executive
and his Dependents to the Company's current program or whatever other
program the Company's Board of Directors may decide to elect. The
Executive shall be solely responsible for all deductible and copayment
amounts due according to the Health Insurance. Upon termination of this
Agreement, all payments under this Section 3(c)(ii) shall cease,
PROVIDED, HOWEVER, that the Executive shall be entitled to payments for
periods prior to the date of the
4
<PAGE>
termination and for which the Executive has not yet been paid.
(iii) OTHER BENEFITS. The Executive shall be eligible to all other
incentive, savings, welfare (including without limitation medical and
dental, disability and salary continuance insurance) plans, practices,
policies and programs applicable on or after the Effective Date to other
contract employees of the Company.
(d) LOANS. (1) The Executive hereby acknowledges that he has received a
loan in the amount of $25,000 (the "Loan") from the Company on November 1, 1993.
The Loan shall bear 10% annual interest, which will be accumulated annually and
will be added to the principal of the Loan. This Loan is due immediately upon
(i) termination for cause under Section 5(e) of this Agreement at any time or
(ii) termination by the Executive of this Agreement at any time before November
1, 1996; provided further that if such Loan is not so due immediately prior to
November 1, 1996, then the entire principle and interest due on the Loan shall
be forgiven.
(2) The Company hereby acknowledges that Executive may borrow, at
one time, up to $50,000 (the "Residence Loan") from the Company until January 1,
1997 for the purpose of purchasing a residence in the Sunrise, Florida area. The
Residence Loan shall bear 8% annual interest, which will be accumulated annually
and will be added to the principal of the Residence Loan. Within 30 days of the
closing of the purchase of the residence by Executive, Executive will execute
and deliver to the Company a second mortgage on such residence securing the
Residence Loan in form and substance satisfactory to the Company (and Executive
shall take all other actions necessary or desirable in the opinion of the
Company to perfect such mortgage). This Residence Loan is due immediately upon
the earliest of (i) five years from the date which the Company makes the
Residence Loan pursuant to this subsection (3), (ii) termination for cause under
Section 5(e) of this Agreement at any time, (iii) termination by the Executive
of this Agreement at any time (other than for "good reason" as defined in
section 5(g)), and (iv) sale of the residence. The Executive agrees that he
shall repay the Residence Loan in an amount of at least 50% of the bonus by the
Company to Executive paid pursuant to Section 3(b)(ii).
5
<PAGE>
(3) The Company hereby acknowledges that Executive may borrow, at
one time, up to $15,000 (the "Other Loan") from the Company until January 1,
1997 for the purpose of purchasing stock of the Company. The Other Loan shall
bear 9% annual interest, which will be accumulated annually and will be added to
the principal of the Other Loan. At the time of the closing of the purchase of
the Company stock, Executive will execute and deliver to the Company a first
priority pledge of such stock securing the Other Loan in form and substance
satisfactory to the Company (and Executive shall take all other actions
necessary or desirable in the opinion of the Company to perfect such pledge).
This Other Loan is due immediately upon the earliest of (i) three years from the
date which the Company makes the Other Loan pursuant to this subsection (3),
(ii) termination for cause under Section 5(e) of this Agreement at any time,
(iii) termination by the Executive of this Agreement at any time before
November 1, 1996 (other than for "good reason" as defined in Section 5(g)), and
(iv) sale of such stock. The Executive agrees that he shall repay the Other Loan
in an amount of at least 50% of the bonus by the Company to Executive paid
pursuant to Section 3(b)(ii).
(e) OTHER BUSINESS EXPENSES. During the Employment Period the Executive
shall be entitled to receive prompt reimbursement from the Company for all
reasonable business expenses incurred by the Executive, itemized in accordance
with the Company's existing policies, practices and procedures.
(f) FRINGE BENEFITS. During the Employment Period, the Executive shall
be entitled to all fringe benefits applicable on or after the Effective Date to
other contract employees of the Company.
(g) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the policies and practices
applicable on or after the Effective Date to the executives of the Company,
PROVIDED that the Executive shall be entitled to a minimum of three weeks of
paid vacation per calendar year. If during the Employment Period the Executive
serves for less than a full calendar year, the minimum three weeks shall be
prorated for the period of the year in which the Executive served. Vacation
accrued but unused at the end of a calendar year may be carried over into the
following calendar year or years, PROVIDED that unused vacation days shall be
accrued up to at maximum of six weeks.
6
<PAGE>
(h) HOLIDAYS AND SICK LEAVE. The Executive shall be entitled to all
holidays that are prescribed by the Company's policies and practices. The
Executive shall be entitled to 5 days paid sick leave per year. Unused sick
leave days may not be carried over to the following calendar year or years.
(i) AUTOMOBILE. During the Employment Period, the Company shall make
available to the Executive an automobile commensurate with his position and
shall pay for all expenses related thereto including, without limitation, gas
and insurance.
4. EXECUTIVE'S OBLIGATIONS. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his attention and time during
normal business hours to the business and affairs of the Company and to perform
faithfully and efficiently the responsibilities assigned to the Executive.
S. TERMINATION.
(a) NOTICE. During the Employment Period, the Executive's employment
hereunder may be terminated upon sixty (60) days prior notice by either
Executive or the Company. Any such termination shall be evidenced by a written
document signed by the party providing notice. If the Executive's employment is
terminated by reason of the Executive's death, the Company shall have no further
obligations to the Executive's legal representatives under this Agreement, other
than those obligations accrued, earned or vested by the Executive as of the date
of his death. In addition, the Executive's family shall be entitled to receive
benefits at least equal to the most favorable benefits provided by the Company
to surviving families of other contract employees of the Company based on the
terms of the benefit plans referenced in Section 3(c) of this Agreement as in
effect on the date of the Executive's death.
(b) DEATH. This Agreement shall terminate automatically upon the
Executive's death. If the Executive's employment is terminated by reason of the
Executive's death, the Company shall have no further obligations to the
Executive's legal representatives under this Agreement, other than those
obligations accrued, earned or vested by the Executive as of the date of his
death. In addition, the Executive's family shall be entitled to
7
<PAGE>
receive benefits at least equal to the most favorable benefits provided by the
Company to surviving families of other contract employees of the Company based
on the terms of the benefit plans referenced in section 3(c) of this Agreement
as in effect on the date of the Executive's death.
(c) DISABILITY. If the Company determines in good faith that the
Executive has a "disability" (as defined below), it may give the Executive
written notice of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 60th day after receipt by the Executive of such notice. No such notice of
termination by reason of disability shall be given until the Executive has
experienced a period of three consecutive months of disability and the
disability is continuing. The notice of termination shall not be effective if
the Executive returns to full-time performance of his duties prior to the
expiration of the 60-day notice period. For purposes of this Agreement,
"disability" shall mean a physical or mental condition which, three months after
its commencement, is determined to be total and permanent by a physician
selected by the Company. The Executive shall be entitled to all compensation and
benefits provided for under this Agreement during the three-month waiting period
for the disability determination and during the 60-day notice of termination
period. In the event that the Company provides long-term disability benefits for
the Executive, such benefits shall not commence until after the employment of
the Executive has been terminated and the Company has ceased paying the
Executive compensation pursuant to the foregoing sentence. If the Executive's
employment is terminated by reason of the Executive's disability, this Agreement
shall terminate without further obligations to the Executive or the Executive's
legal representatives under this Agreement, other than those obligations
accrued, earned or vested by the Executive as of the date of the termination. In
addition, the Executive and the Executive's family shall be entitled to receive
benefits including without limitation disability benefits, at least equal to the
most favorable benefits provided by the Company to other contract employees of
the Company based on the terms of the benefit plans referenced in Section 3(c)
of this Agreement as in effect on the date the Executive's disability commenced.
(d) VOLUNTARY TERMINATION OR RETIREMENT. If the Executive shall elect to
voluntarily terminate his employment (other than for "good reason" as defined in
8
<PAGE>
section 5(g) below) or to retire during the Employment Period, this Agreement
shall terminate automatically and the Company shall have no further obligations
to the Executive under this Agreement, other than those obligations accrued,
earned or vested by the Executive as of the date of the termination or
retirement.
(e) CAUSE. During the Employment Period, the Company may terminate the
Executive's employment for "cause," as defined below. For purposes of this
Agreement, "cause," shall mean:
(i) an act or acts of personal dishonesty taken by the Executive at
the expense of or against the interests of the Company;
(ii) repeated violations by the Executive of his obligations under
Section 4 of this Agreement which are not remedied within a reasonable
period of time after receipt of written notice from the Company of such
violations;
(iii) any direct or indirect disclosure of any confidential
information or other special knowledge of the finances, business or
other affairs of the Company;
(iv) the conviction of the Executive of a felony; or
(v) the conviction of the Executive of a serious misdemeanor
involving illegal use, possession or sale of drugs, larceny, crimes of
violence or sex offenses.
If the Executive's employment is terminated for cause, this Agreement shall
terminate without further obligations to the Executive under this Agreement,
other than those obligations accrued, earned or vested by the Executive as of
the date of the termination. The Executive shall not be entitled to any Bonus in
respect of the year of termination in the event the Executive's employment is
terminated for cause pursuant to this Section 5(e).
(f) INVOLUNTARY TERMINATION. If during the Employment Period the
Company terminates the Executive's employment other than for reasons set forth
in Sections 5(a) through 5(e) above, it shall be deemed to be an involuntary
termination and the Company shall pay to the Executive the following amounts:
9
<PAGE>
(i) to the extent not theretofore paid, the Company shall pay the
Executive's Salary through the date of such involuntary termination;
(ii) the Company shall pay the Executive on the date of such
involuntary termination an amount equal to six months of the Executive's
Base Salary; provided that if such involuntary termination occurs as a
result of a Change of Control, such payment shall be in an amount equal
to eight months of the Executive's Base Salary; and
(iii) the Company shall pay in one cash lump sum any vacation days
accrued but unused as of the date of termination to be paid within 30
days of such involuntary termination.
(g) GOOD REASON. During the Employment Period, the Executive may
terminate his employment for "good reason" as defined below. For purposes of
this Agreement, "good reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with Executive's position, duties and responsibilities as
set forth in Section 3(a) of this Agreement or any action by the
Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose any isolated,
insubstantial and inadvertent action by the Company which is not taken
in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Sections 3(b) through 3(g) of this Agreement regarding the
Executive's compensation, benefits, expenses, fringe benefits, vacation
and office staff, other than an isolated, insubstantial and inadvertent
action by the Company which is not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 3(a) of this
Agreement, except for travel reasonably required in the performance of
the Executive's responsibilities; or
10
<PAGE>
(iv) any failure by the Company to comply with and satisfy Section
10 of this Agreement with respect to successors.
In the event that the Executive terminates his employment for good reason as
defined in this Section 5(g), it shall be deemed to be an "involuntary
termination" as set forth in Section 5(f) above and the Executive shall be
entitled to all payments and obligations set forth in Sections 5(f)(i) through
5(f)(v) of this Agreement as if the Executive's employment had been
involuntarily terminated.
6. NOTICE OF TERMINATION. Any termination by the Company for any reason
or by the Executive for any reason shall be communicated by a written notice
which indicates (i) the specific termination provision in this Agreement relied
upon, (ii) the facts and circumstances claimed to provide a basis for such
termination, and (iii) the date of termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executives continuing or future participation in any benefit,
incentive or other plans, programs, policies or practices provided by the
Company and for which the Executive may otherwise qualify. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of the Company at or subsequent to the
termination of the Executive's employment shall be payable in accordance with
such plan, policy, practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment or
other claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. The Company agrees to
pay, to the full extent permitted by law, all legal fees and expenses, as
incurred by the Company, the Executive and others, which the Executive may
reasonably incur as a result of any contest by the Company or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof, plus in each case interest at
the applicable Federal rate provided
11
<PAGE>
for in Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended
(the "Code").
9. CONFIDENTIALITY.
(a) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret, proprietary or confidential information, knowledge or
data relating to the Company and its business, including without limitation
financial information and customer lists, which shall have been obtained by the
Executive during his employment with the Company and which shall not be or
become public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). Notwithstanding the foregoing,
the Executive may disclose any such information if such information is compelled
by legal process, provided that if Executive is so compelled, he shall provide
the Company with prompt notice so that it may seek a protective order or other
remedy. In any event, the Executive shall furnish only that portion of the
confidential information that is legally required to be disclosed.
(b) In the event that the Executive breaches any provision of this
Section 9, any payments or other benefits promised under this Agreement shall be
forfeited. In addition, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Executive from
committing or continuing any violation of this Agreement.
10. NON COMPETITION. The Executive agrees that (a) during the Employment
Period and (b) unless the Executive terminates his employment for "good reason"
or his employment is involuntarily terminated, for two years thereafter, he will
not, within the continental United States, Israel or any other country in which
the Company has operations, directly or indirectly, engage or participate or
make any financial investments in or become employed by or render advisory or
other services to or for any person, firm or corporation, or in connection with
any business activity, other than that of the Company and its subsidiaries,
directly or indirectly in competition with any of the business operations or
activities of the Company and its subsidiaries as at the date of termination of
his employment, whether such companies are presently existing or hereafter
acquired. Nothing herein contained, however,
12
<PAGE>
shall restrict the Executive from making any investments in any company whose
stock is listed on a national securities exchange or actively traded in the
over-the counter market, so long as such investment does not give him the right
to control or influence the policy decisions of any such business or enterprise
which is or might be directly or indirectly in competition with any of such
business operations or activities of the Company or any of its subsidiaries.
11. RESTRICTIONS ON SOLICITATION. The Executive agrees that during the
Employment Period and for two years thereafter, he will not:
(i) directly or indirectly solicit, raid, entice or induce any
employee of the Company or any of its subsidiaries to become an employee
of any person, firm or corporation which is, directly or indirectly, in
competition with the business or activities of the Company or any of its
subsidiaries;
(ii) directly or indirectly approach any such employee for these
purposes;
(iii) authorize or knowingly approve the taking of such actions by
other persons on behalf of any such person, firm or corporation, or
assist any such person, firm or corporation in taking such action; or
(iv) directly or indirectly solicit, raid, entice or induce any
person, firm or corporation who or which on the date hereof is, or at
the time during the term of his employment with the Company shall be, a
customer of the Company or of any of its subsidiaries to become a
customer for the same or similar products which it purchased from the
Company or any of its subsidiaries, of any other person, firm or
corporation, and the Executive shall not approach any such customer for
such purpose or authorize or knowingly approve the taking of such
actions by any other person.
12. SUCCESSORS. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
13
<PAGE>
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes this Agreement by
operation of law, or otherwise.
13. BINDING ARBITRATION. In the event that the Company and the Executive
cannot agree on an interpretation of any provision of this Agreement, or in the
event that the Company fails to make any payments or otherwise fulfill any
obligations required by the terms of this Agreement, the Company and the
Executive agree to resolve any such dispute through binding arbitration. Any
request for such arbitration shall be served on the other party by written
notice. The parties shall agree upon and select an arbitrator within 20 days
after written demand is made by either party for such arbitration. The
arbitrator shall set a time for hearing within 60 days of his/her selection.
Each party shall have an opportunity to present evidence on the issues in
dispute before the arbitrator and each party may be represented by legal counsel
if either so desires. The decision of the arbitrator shall be rendered in
writing to both parties within 30 days of the close of the hearing. The decision
of the arbitrator shall be final and binding upon both parties. Any legal fees,
expenses or other costs incurred by the Company and the Executive in connection
with such arbitration shall be borne by the Company.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(b) The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
14
<PAGE>
(c) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE: IF TO THE COMPANY:
9203B Boca Garden Circle South,
Boca Raton, Florida, 33496
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) A party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(g) This Agreement supersedes any prior employment agreement between the
Company and the Executive and contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
(h) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which, together, shall constitute one and the
same instrument.
15
<PAGE>
IN WITNESS WHERELF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
KELLSTROM INDUSTRIES, INC. (formerly
Israel Tech Aquisition Corp.);
/s/ ZIVI R. NEDIVI
------------------
Zivi R. Nedivi
Date of Signature: 1/30/96
EXECUTIVE
/s/ PAUL F. STEELE
------------------
Paul F. Steele
Date of Signature: 1/30/96
16
Exhibit 10.10
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDEMENT NO. 1, dated as of April 18, 1996, to the Employment Agreement,
dated as of January 30, 1996 (the "Employment Agreement"), between Kellstrom
Industries, Inc., a Delaware corporation (the "Company"), and Paul F. Steele
(the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company as its Vice President pursuant
to the terms and provisions contained in the Employment Agreement;
WHEREAS, the Company desires to indemnify the Executive in order to assure the
Executive that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Executive hereby agree as follows:
1. INDEMNIFICATION. If the Executive acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, and the Executive had no reasonable cause to believe that his
conduct was unlawful or detrimental to the Company, the Company shall indemnify
and hold harmless the Executive and his heirs and legal representatives from and
against any and all claims, losses, liabilities, damages, costs, demands, causes
of action (whether legal, equitable, administrative, civil or criminal) ,
judgments, settlements (subject to the last sentence of paragraph 3 hereof) ,
fines, court costs and other expenses of any kind or nature whatsoever,
including, without limitation, attorneys, fees and disbursements (collectively,
"Losses") , which may be threatened against, incurred or suffered by the
Executive or his heirs and legal representatives in connection with, relating to
or arising out of, directly or indirectly, the Executive's performance, duties
and responsibilities to, for and on behalf of, the Company, including, without
limitation, (i) the Employment Agreement and all actions or omissions taken
thereunder and (ii) any acts, omissions or alleged acts or omissions arising out
of the Executive's activities on behalf of the Company or in furtherance of the
interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the
By-Laws of the Company, the Company shall have no obligation to indemnify the
Executive if the Loss incurred by the Executive (i) arises out of an action
brought directly by the Company against the Executive or (ii) arises, directly
or indirectly, as a result of the Executive being terminated for cause (as such
term is defined in the Employment Agreement).
<PAGE>
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of
notice of any claim against the Executive pursuant to which the Executive is
entitled to indemnification, the Company shall have the right to assume the
defense of such claim, including the employment of counsel of its choice.
Although the Executive shall have the right to employ his own counsel, the fees
and expenses of such counsel shall be at the expense of the Executive. The
Company shall not be liable for any settlement of any claim or action effected
without its written consent, provided that such consent was not unreasonably
withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all
amounts payable in respect of Losses immediately upon its receipt of a statement
with respect thereto rendered by the Executive, together with appropriate
supporting documentation thereof. It is the express intention of the parties
hereto that all such amounts shall be paid by the Company on or before the date
payment thereof is due, and that the Executive shall not be required at any time
to bear any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIQNS. The provisions of this Amendment No. 1
shall inure to the benefit of and be binding upon the Company and its successors
and assigns and the heirs and legal representatives of the Executive. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform the terms
and conditions contained herein in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.
As used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Amendment by operation of law, or otherwise.
6. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
provisions contained herein shall not constitute an amendment of any term or
provision of the Employment Agreement, and all such terms and conditions shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.
7. AMENDMENT. This Amendment No. 1 may not be amended or modified
otherwise than by a written agreement executed by the parties hereto.
8. COUNTERPARTS. This Amendment No. 1 may be executed in
counterparts, each of which shall be an original and all of which, taken
together, shall constitute one and the same agreement.
9. CAPTIONS. The captions of this Amendment No. 1 are not part of the
provisions hereof and shall have no force and effect.
10. GOVERNING LAW. This Amendment No. 1 shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By: /s/ ZIVI R. NEDIVI
-------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
EXECUTIVE
/s/ PAUL F. STEELE
------------------
EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
INDEMNIFICATION, dated as of April 23, 1996, between Kellstrom Industries,
Inc., a Delaware corporation (the "Company"), and Joram D. Rosenfeld (the
"Director").
W I T N E S S E T H:
WHEREAS, the Director is acting as a member of the Board of Directors to the
Company;
WHEREAS, the Company desires to indemnify the Director in order to assure the
Director that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Director hereby agree as follows:
1. INDEMNIFICATION. If the Director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Director had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Director and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal), judgments,
settlements (subject to the last sentence of paragraph 3 hereof), fines, court
costs and other expenses of any kind or nature whatsoever, including, without
limitation, attorneys' fees and disbursements (collectively, "Losses"), which
may be threatened against, incurred or suffered by the Director or his heirs and
legal representatives in connection with, relating to or arising out of,
directly or indirectly, the Director's performance, duties and responsibilities
to, for and on behalf of, the Company, including, without limitation, any acts,
omissions or alleged acts or omissions arising out of the Director's activities
on behalf of the Company or in furtherance of the interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Director
if the Loss incurred by the Director (i) arises out of an action brought
directly by the Company against the Director or (ii) arises, directly or
indirectly, as a result of the Director being removed for cause, as determined
by the stockholders of the Company or in good faith by the other members of the
Board of Directors of the Company.
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Director pursuant to
<PAGE>
which the Director is entitled to indemnification, the Company shall have the
right to assume the defense of such claim, including the employment of counsel
of its choice. Although the Director shall have the right to employ his own
counsel, the fees and expenses of such counsel shall be at the expense of the
Director. The Company shall not be liable for any settlement of any claim or
action effected without its written consent, provided that such consent was not
unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Director, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Director shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to
the benefit of and be binding upon the Company and its successors and assigns
and the heirs and legal representatives of the Director. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Agreement by operation of law, or otherwise.
6. AMENDMENT. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto.
7. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
8. CAPTIONS. The captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Director has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By: /s/ ZIVI R. NEDIVI
-------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
DIRECTOR
/s/ JORAM D. ROSENFELD
----------------------------
EXHIBIT 10.12
INDEMNIFICATION AGREEMENT
INDEMNIFICATION, dated as of April 23, 1996, between Kellstrom Industries,
Inc. , a Delaware corporation (the "Company") , and Yoav Stern (the
"Director").
W I T N E S S E T H:
WHEREAS, the Director is acting as a member of the Board of Directors to the
Company;
WHEREAS, the Company desires to indemnify the Director in order to assure the
Director that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Director hereby agree as follows:
1. INDEMNIFICATION. If the Director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Director had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Director and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal), judgments,
settlements (subject to the last sentence of paragraph 3 hereof), fines, court
costs and other expenses of any kind or nature whatsoever, including, without
limitation, attorneys' fees and disbursements (collectively, "Losses"), which
may be threatened against, incurred or suffered by the Director or his heirs and
legal representatives in connection with, relating to or arising out of,
directly or indirectly, the Director's performance, duties and responsibilities
to, for and on behalf of, the Company, including, without limitation, any acts,
omissions or alleged acts or omissions arising out of the Director's activities
on behalf of the Company or in furtherance of the interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Director
if the Loss incurred by the Director (i) arises out of an action brought
directly by the Company against the Director or (ii) arises, directly or
indirectly, as a result of the Director being removed for cause, as determined
by the stockholders of the Company or in good faith by the other members of the
Board of Directors of the Company.
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Director pursuant to
<PAGE>
which the Director is entitled to indemnification, the Company shall have the
right to assume the defense of such claim, including the employment of counsel
of its choice. Although the Director shall have the right to employ his own
counsel, the fees and expenses of such counsel shall be at the expense of the
Director. The Company shall not be liable for any settlement of any claim or
action effected without its written consent, provided that such consent was not
unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Director, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Director shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to
the benefit of and be binding upon the Company and its successors and assigns
and the heirs and legal representatives of the Director. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Agreement by operation of law, or otherwise.
6. AMENDMENT. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto.
7. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
8. CAPTIONS. The captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Director has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTRIES, INC.
By: /s/ ZIVI R. NEDIVI
--------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
DIRECTOR
/s/ YOAV STERN
--------------------------
EXHIBIT 10.13
INDEMNIFICATION AGREEMENT
INDEMNIFICATION, dated as of April 23, 1996, between Kellstrom Industries,
Inc., a Delaware corporation (the "Company"), and David Jan Mitchell (the
"Director").
W I T N E S S E T H:
WHEREAS, the Director is acting as a member of the Board of Directors to the
Company;
WHEREAS, the Company desires to indemnify the Director in order to assure the
Director that he will not, pursuant to the terms and conditions contained
herein, incur personal liability for actions taken in carrying out his corporate
responsibilities;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Director hereby agree as follows:
1. INDEMNIFICATION. If the Director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and the Director had no reasonable cause to believe that his conduct
was unlawful or detrimental to the Company, the Company shall indemnify and hold
harmless the Director and his heirs and legal representatives from and against
any and all claims, losses, liabilities, damages, costs, demands, causes of
action (whether legal, equitable, administrative, civil or criminal), judgments,
settlements (subject to the last sentence of paragraph 3 hereof), fines, court
costs and other expenses of any kind or nature whatsoever, including, without
limitation, attorneys' fees and disbursements (collectively, "Losses"), which
may be threatened against, incurred or suffered by the Director or his heirs and
legal representatives in connection with, relating to out of, directly or
indirectly, the Director's duties and responsibilities to, for and on behalf of,
including, without limitation, any acts, omissions or alleged acts arising out
of the Director's activities on behalf of the Company or in furtherance of the
interests of the Company.
2. EXCEPTIONS. Notwithstanding anything contained herein or in the By-Laws
of the Company, the Company shall have no obligation to indemnify the Director
if the Loss incurred by the Director (i) arises out of an action brought
directly by the Company against the Director or (ii) arises, directly or
indirectly, as a result of the Director being removed for cause, as determined
by the stockholders of the Company or in good faith by the other members of the
Board of Directors of the Company.
3. NOTIFICATION OF CLAIM. Promptly after receipt by the Company of notice
of any claim against the Director pursuant to
<PAGE>
which the Director is entitled to indemnification, the Company shall have the
right to assume the defense of such claim, including the employment of counsel
of its choice. Although the Director shall have the right to employ his own
counsel, the fees and expenses of such counsel shall be at the expense of the
Director. The Company shall not be liable for any settlement of any claim or
action effected without its written consent, provided that such consent was not
unreasonably withheld.
4. PAYMENT OF INDEMNITY AMOUNTS. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the Director, together with appropriate supporting
documentation thereof. It is the express intention of the parties hereto that
all such amounts shall be paid by the Company on or before the date payment
thereof is due, and that the Director shall not be required at any time to bear
any costs or expenses on account of Losses.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to
the benefit of and be binding upon the Company and its successors and assigns
and the heirs and legal representatives of the Director. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the terms and
conditions contained herein in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used herein, the "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes this
Agreement by operation of law, or otherwise.
6. AMENDMENT. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto.
7. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original and all of which, taken together, shall constitute
one and the same agreement.
8. CAPTIONS. The captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the Director has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first written above.
KELLSTROM INDUSTR6ES, INC.
By: /s/ ZIVI R. NEDIVI
--------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
DIRECTOR
/s/ DAVID JAN MITCHELL
-----------------------------
EXHIBIT 10.15
AMENDMENT
AMENDMENT, dated as of January 15, 1996, among Zivi R. Nedivi, Joram D.
Rosenfeld and Yoav Stern (each a "Stockholder" and collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders are parties to a Stockholders Agreement dated
August 24, 1995 (the "Stockholders Agreement") pursuant to which the
Stockholders agreed, among other things, to restrict the disposition of the
Shares owned by them (capitalized terms used herein not otherwise defined shall
have the meanings given to them in the Stockholders Agreement);
WHEREAS, on the date hereof, the Stockholders have formed Helix Capital
Corporation, L.L.C., a Delaware limited liability company ("Helix");
WHEREAS, the Stockholders desire to contribute capital to Helix in the form
of the promissory notes attached hereto as EXHIBIT A (the "Notes") and Helix is
desirous of accepting such capital contribution on the condition that the Shares
are pledged as collateral for the Notes;
WHEREAS, in connection therewith, the Stockholders have agreed to amend the
Stockholders Agreement pursuant to the terms and provisions contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DISPOSITION OF SHARES. Section 3(a) of the Stockholders Agreement
is hereby amended by adding at the end thereof the following phrase:
"and the issuance of, and in accordance with the terms of, the Secured
Non-Recourse Promissory Notes issued by each Stockholder to Helix
Capital Corporation, L.L.C. on the date hereof, which Notes are
secured by, among other things, the Shares."
2. EXERCISE BY HELIX. The Stockholders agree that notwithstanding
anything contained in the Stockholders Agreement to the contrary, any exercise
by Helix of the rights granted to it pursuant to the Notes shall not constitute
a violation or breach of the Stockholders Agreement, including without
limitation, the right
<PAGE>
to purchase the Shares in accordance with the terms of the Notes and the right,
upon a default of the Notes, to exercise all ownership rights to the Shares.
3. STOCKHOLDER CAPACITY. Each Stockholder executing this Amendment
does not make any agreement or understanding herein in his capacity as an
officer or director of the Company. Each Stockholder signs solely in his
capacity as the record and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, such Stockholder's Shares.
4. GOVERNING LAW. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
the principles of conflicts of laws thereunder.
5. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
amendments contained herein shall not constitute a waiver or amendment of any
term or provision of the Stockholders Agreement, and all such terms and
provisions shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed being deemed an original and all of
which taken together constituting one and the same agreement.
7. SECTION HEADINGS. The section headings contained herein are for the
purpose of convenience only and are not intended to define or limit the contents
thereof.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first above written.
/s/ ZIVI R. NEDIVI
-------------------------------
Zivi R. Nedivi
/s/ JORAM D. ROSENFELD
------------------------------
Joram D. Rosenfeld
/s/ YOAV STERN
------------------------------
Yoav Stern
EXHIBIT 10.17
AMENDMENT TO STOCK PURCHASE AGREEMENT
Amendment, dated as of January 15, 1996 (this "Amendment"), between
Kellstrom Industries, Inc., a Delaware corporation (the Company), and Zivi R.
Nedivi (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Company and the Stockholder are parties to a Stock Purchase
Agreement, dated as of August 24, 1995 (the "Stock Purchase Agreement"),
pursuant to which the Stockholder purchased 181,818 shares of common stock, par
value $.001 per share (the "Shares"), of the Company;
WHEREAS in connection with such purchase, the Stockholder agreed to
restrict the disposition of the Shares;
WHEREAS, the Stockholder has requested that the Company amend the Stock
Purchase Agreement on the terms and conditions contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. PLEDGE OF THE SHARES. (a) Notwithstanding Section 2 of the Stock
Purchase Agreement, the Stockholder shall be entiled to pledge the Shares to
Helix Capital Corporation, L.L.C., a Delaware limited liability company
("Helix"), as collateral for the Secured Non-Recourse Promissory Note issued by
the Stockholder to Helix as of the date hereof (the "Note"), a copy of which is
annexed hereto as EXHIBIT A.
(b) The Company agrees that any exercise by Helix of its rights
under the Note shall not constitute a violation or breach by the Stockholder of
Section 2 of the Stock Purchase Agreement.
2. EFFECT OF AMENDMENT. Except as expressly set forth herein, the
amendments contained herein shall not constitute a waiver or amendment of any
term or provision of the Stock Purchase Agreement, and all such terms and
provisions shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
3. GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereunder.
<PAGE>
4. COUNTERPARTS. This Amendment may be executed in counterparts, each
of which when so executed being deemed an original and both of which taken
together constituting one and the same agreement.
5. SECTION HEADINGS. The section headings contained herein are for the
purpose of convenience only and are not intended to define or limit the contents
thereof.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first written above.
KELLSTROM INDUSTRIES INC.
By: /s/ ANTHONY MOTISI
-------------------------
Name: Tony Motisi
------------------------
Title: V.P. Operations
-----------------------
/s/ ZIVI R. NEDIVI
----------------------------
Zivi R. Nedivi
- 2-
EXHIBIT 10.19
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT.
No. of Shares of Common Stock: 300,000
WARRANT
To Purchase Common Stock of
KELLSTROM INDUSTRIES INC.
THIS IS TO CERTIFY THAT Allen & Securities Incorporated, or registered
assigns, is entitled, at any time and from time to time prior to April 11, 2001,
to purchase from KELLSTROM INDUSTRIES, INC., a Delaware corporation (the
"Company"), 300,000 shares of the Common Stock, par value $.001 per share, of
the Company ("Common Stock") at a purchase price of $5.00 per share, all on the
terms and conditions and pursuant to the provisions hereinafter set forth.
This Warrant shall be exercisable, in whole or in part, at any time and
from time to time prior to its expiration by its surrender to the Company at the
principal office thereof (wherever then located), with the exercise form
attached hereto completed and executed and accompanied by payment in full of the
exercise price for the number of shares to be purchased.
If after the date hereof, and subject to the provisions with respect to
fractional shares set forth below, the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock or by a
split-up of shares of Common Stock or other similar event, then, on the
effective day of such stock dividend or split-up, the number of shares issuable
on exercise of this Warrant ("Warrant Shares") shall be increased in proportion
to such increase in outstanding shares of Common Stock and the then applicable
Exercise Price shall be correspondingly decreased. If after the date hereof, and
subject to the provisions with respect to fractional shares set forth below, the
number of outstanding shares of Common Stock is decreased by a consolidation,
combination or reclassification of shares of Common Stock or other similar
<PAGE>
event, then, after the effective date of such of consolidation, combination or
reclassification, the number of Warrant Shares shall be decreased in proportion
to such decrease in outstanding shares and the then applicable Exercise Price
shall be correspondingly increased. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be affected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the holder of this Warrant shall thereafter have the right
to purchase and receive, upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented thereby, such shares of stock, securities, or assets as
may be issued or payable with respect to or in exchange for the number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by this Warrant, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrants Shares) shall thereafter be applicable, as nearly
as may be in relation to any share of stock, securities, or assets thereafter
deliverable upon the exercise hereof. Upon every adjustment of the Exercise
Price or the number of Warrant Shares, the Company shall give written notice
thereof to the holder of this Warrant, which notice shall state the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of Warrant Shares purchasable at such price, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in the first,
second or third sentence of this paragraph, then, in any such event, the Company
shall give written notice in the manner set forth above of the record date for
such dividend, distribution, or subscription rights, or the effective date of
such reorganization, reclassification, consolidation, merger, sale, dissolution
liquidation, winding up or issuance. Such notice shall also specify the date as
of which the holders of Com-
2
<PAGE>
mon Stock of record shall participate in such dividend, distribution, or
subscription rights, or shall be entitled to exchange their Common Stock for
stock, securities or other assets deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding up or issuance. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such event. Notwithstanding any
provision contained in this Warrant to the contrary, the Company shall not issue
fractional shares upon exercise of this Warrant. If, by reason of any adjustment
made pursuant to this paragraph, the holder of this Warrant would be entitled,
upon the exercise of this Warrant, to receive a fractional interest in a share,
the Company shall, upon such exercise, purchase such fractional interest,
determined as follows:
(i) if the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market or Nasdaq SmallCap Market or the OTC
Bulletin Board, the current value shall be the last reported sale price of the
Common Stock on such exchange on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the average of
the closing bid and asked prices for such day on such exchange; or
(ii) if the Common Stock is not listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last reported bid
and asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant; or
(iii) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
value shall be an amount determined in such reasonable manner prescribed by the
Board of Directors of the Company.
This Warrant may be redeemed, at the option of the Company as a whole and
not in part from to its expiration, at the office of the Company, upon the
notice specified below, at the price of $.01 per Warrant ("Redemption Price"),
provided that the last sales price of the Common Stock has been at least 170% of
the then effective Exercise Price on each of the twenty (20) consecutive trading
days ending on the third business day prior to the date on which notice of
redemption is given. In the event
3
<PAGE>
the Company shall elect to redeem all or any part of this Warrant, the Company
shall fix a date for the redemption. Notice of redemption shall be mailed by the
first class mail, postage prepaid, by the Company not less than 30 days from the
date fixed for redemption to the holder of this Warrant at their last address
specified by such holder to the Company in writing as they shall appear on the
registration books. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the registered
holder received such notice. This Warrant may be exercised in accordance with
the terms hereof at any time after notice of redemption shall have been given by
the Company pursuant hereto and prior to the time and date fixed for redemption.
On and after the redemption date, the record holder of this Warrant shall have
no further rights except to receive, upon surrender of this Warrant, the
redemption price. This Warrant does not entitle the holder hereof to any of the
rights of a stockholder of the Company, including, without limitation, the right
to receive dividends, or other distributions, exercise any preemptive rights to
vote or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of directors of the Company or any
other matter.
Neither this Warrant nor the Warrant Shares may be sold, assigned or
otherwise transferred by the holder hereof until April 11, 1997 without the
prior written consent of the Company.
In the event that, at any time following the exercise (in whole or in part)
of this Warrant, the Company shall undertake to register under the federal
securities laws any shares of Common Stock pursuant to a registration statement
appropriate for the registration of Warrant Shares and for the subsequent public
offering and sale of Warrant Shares by the holder thereof, the Company shall
provide such holder with adequate prior written notice of such registration to
enable such holder to have Warrant Shares included in such registration. The
Company shall pay all of the costs of such registration of Warrant Shares, but
shall have no responsibility of any nature whatsoever for the costs or expenses
of the holder thereof with respect to the offer or sale of Warrant Shares
(including, but not limited to, sales or brokerage commissions and underwriting
fees or discounts). As a condition to the inclusion of Warrant Shares in any
registration statement of the Company, the holder of such Warrant Shares shall
execute and deliver to the Company a registration agreement, in such form as the
Company may reasonably require, containing such terms and conditions as are
customary in the circumstances. Notwithstanding anything to the contrary set
forth in this paragraph, in the event that the Company's undertaking to register
shares of
4
<PAGE>
its Common Stock is in connection with a proposed underwritten public offering
of such shares and the proposed underwriter shall request that no Warrant Shares
(or a limited number of Warrant Shares) be included in such registration, the
right of any holder of Warrant Shares to have Warrant Shares of such holder
included in such registration shall be limited in accordance with such request.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed.
Dated as of June 2, 1996
KELLSTROM INDUSTRIES INC.
By: /s/ ZIVI R. NEDIVI
----------------------------
Zivi R. Nedivi
5
<PAGE>
SUBSCRIPTION FORM
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of _____________ Shares of the Common Stock, par
value $.00l per share, of KELLSTROM INDUSTRIES, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise)
be issued in the name of and delivered to ______________________________ whose
address is _________________________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in this
Warrant, that a new Warrant of like tenor and date for the balance of the shares
of Common Stock issuable hereunder be delivered to the undersigned.
________________________________
(Name of Registered Owner)
________________________________
(Signature of Registered Owner)
________________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
6
EXHIBIT 10.20
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT.
No. of Shares of Common Stock: 100,000
WARRANT
To Purchase Common Stock of
KELLSTROM INDUSTRIES INC.
THIS IS TO CERTIFY THAT J. W. Charles Securities Inc. or registered
assigns, is entitled, at any time and from time to time prior to April 11, 2001,
to purchase from KELLSTROM INDUSTRIES, INC., a Delaware corporation (the
"Company"), 100,000 shares of the Common Stock, par value $.001 per share, of
the Company ("Common Stock") at a purchase price of $8.75 per share, all on the
terms and conditions and pursuant to the provisions hereinafter set forth.
This Warrant shall be exercisable, in whole or in part, at any time and
from time to time prior to its expiration by its surrender to the Company at the
principal office thereof (wherever then located), with the exercise form
attached hereto completed and executed and accompanied by payment in full of the
exercise price for the number of shares to be purchased.
If after the date hereof, and subject to the provisions with respect to
fractional shares set forth below, the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock or by a
split-up of shares of Common Stock or other similar event, then, on the
effective day of such stock dividend or split-up, the number of shares issuable
on exercise of this Warrant ("Warrant Shares") shall be increased in proportion
to such increase in outstanding shares of Common Stock and the then applicable
Exercise Price shall be correspondingly decreased. If after the date hereof, and
subject to the provisions with respect to fractional shares set forth below, the
number of outstanding shares of Common Stock is decreased by a consolidation,
combination or reclassification of shares of Common Stock or other similar
<PAGE>
event, then, after the effective date of such of consolidation, combination or
reclassification, the number of Warrant Shares shall be decreased in proportion
to such decrease in outstanding shares and the then applicable Exercise Price
shall be correspondingly increased. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be affected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the holder of this Warrant shall thereafter have the right
to purchase and receive, upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented thereby, such shares of stock, securities, or assets as
may be issued or payable with respect to or in exchange for the number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by this Warrant, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrants Shares) shall thereafter be applicable, as nearly
as may be in relation to any share of stock, securities, or assets thereafter
deliverable upon the exercise hereof. Upon every adjustment of the Exercise
Price or the number of Warrant Shares, the Company shall give written notice
thereof to the holder of this Warrant, which notice shall state the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of Warrant Shares purchasable at such price, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in the first,
second or third sentence of this paragraph, then, in any such event, the Company
shall give written notice in the manner set forth above of the record date for
such dividend, distribution, or subscription rights, or the effective date of
such reorganization, reclassification, consolidation, merger, sale, dissolution
liquidation, winding up or issuance. Such notice shall also specify the date as
of which the holders of Com-
2
<PAGE>
mon Stock of record shall participate in such dividend, distribution, or
subscription rights, or shall be entitled to exchange their Common Stock for
stock, securities or other assets deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding up or issuance. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such event. Notwithstanding any
provision contained in this Warrant to the contrary, the Company shall not issue
fractional shares upon exercise of this Warrant. If, by reason of any adjustment
made pursuant to this paragraph, the holder of this Warrant would be entitled,
upon the exercise of this Warrant, to receive a fractional interest in a share,
the Company shall, upon such exercise, purchase such fractional interest,
determined as follows:
(i) if the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market or Nasdaq SmallCap Market or the OTC
Bulletin Board, the current value shall be the last reported sale price of the
Common Stock on such exchange on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the average of
the closing bid and asked prices for such day on such exchange; or
(ii) if the Common Stock is not listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last reported bid
and asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant; or
(iii) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
value shall be an amount determined in such reasonable manner prescribed by the
Board of Directors of the Company.
This Warrant may be redeemed, at the option of the Company as a whole and
not in part from to its expiration, at the office of the Company, upon the
notice specified below, at the price of $.01 per Warrant ("Redemption Price"),
provided that the last sales price of the Common Stock has been at least 170% of
the then effective Exercise Price on each of the twenty (20) consecutive trading
days ending on the third business day prior to the date on which notice of
redemption is given. In the event
3
<PAGE>
the Company shall elect to redeem all or any part of this Warrant, the Company
shall fix a date for the redemption. Notice of redemption shall be mailed by the
first class mail, postage prepaid, by the Company not less than 30 days from the
date fixed for redemption to the holder of this Warrant at their last address
specified by such holder to the Company in writing as they shall appear on the
registration books. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the registered
holder received such notice. This Warrant may be exercised in accordance with
the terms hereof at any time after notice of redemption shall have been given by
the Company pursuant hereto and prior to the time and date fixed for redemption.
On and after the redemption date, the record holder of this Warrant shall have
no further rights except to receive, upon surrender of this Warrant, the
redemption price. This Warrant does not entitle the holder hereof to any of the
rights of a stockholder of the Company, including, without limitation, the right
to receive dividends, or other distributions, exercise any preemptive rights to
vote or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of directors of the Company or any
other matter.
Neither this Warrant nor the Warrant Shares may be sold, assigned or
otherwise transferred by the holder hereof until April 11, 1997 without the
prior written consent of the Company.
In the event that, at any time following the exercise (in whole or in part)
of this Warrant, the Company shall undertake to register under the federal
securities laws any shares of Common Stock pursuant to a registration statement
appropriate for the registration of Warrant Shares and for the subsequent public
offering and sale of Warrant Shares by the holder thereof, the Company shall
provide such holder with adequate prior written notice of such registration to
enable such holder to have Warrant Shares included in such registration. The
Company shall pay all of the costs of such registration of Warrant Shares, but
shall have no responsibility of any nature whatsoever for the costs or expenses
of the holder thereof with respect to the offer or sale of Warrant Shares
(including, but not limited to, sales or brokerage commissions and underwriting
fees or discounts). As a condition to the inclusion of Warrant Shares in any
registration statement of the Company, the holder of such Warrant Shares shall
execute and deliver to the Company a registration agreement, in such form as the
Company may reasonably require, containing such terms and conditions as are
customary in the circumstances. Notwithstanding anything to the contrary set
forth in this paragraph, in the event that the Company's undertaking to register
shares of
4
<PAGE>
its Common Stock is in connection with a proposed underwritten public offering
of such shares and the proposed underwriter shall request that no Warrant Shares
(or a limited number of Warrant Shares) be included in such registration, the
right of any holder of Warrant Shares to have Warrant Shares of such holder
included in such registration shall be limited in accordance with such request.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed.
Dated as of January 1996
KELLSTROM INDUSTRIES INC.
By: /s/ ZIVI R. NEDIVI
----------------------------
Zivi R. Nedivi
5
<PAGE>
SUBSCRIPTION FORM
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of _____________ Shares of the Common Stock, par
value $.00l per share, of KELLSTROM INDUSTRIES, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise)
be issued in the name of and delivered to ______________________________ whose
address is _________________________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in this
Warrant, that a new Warrant of like tenor and date for the balance of the shares
of Common Stock issuable hereunder be delivered to the undersigned.
________________________________
(Name of Registered Owner)
________________________________
(Signature of Registered Owner)
________________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
6
EXHIBIT 10.21
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE LAWS OF ANY STATE. THEY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
10,000 Warrants
KELLSTROM INDUSTRIES, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for
value received John Gleason or registered assigns ("the Holder") is the owner of
the number of warrants ("Warrants") specified above, each of which entitles the
Holder thereof to purchase, at any time on or before the Expiration Date
(hereinafter defined), one fully paid and nonassessable share of Common Stock,
$.OO1 par value ("Common Stock"), of Kellstrom Industries, Inc., a Delaware
corporation (the "Company"), at a purchase price of $5.00 per share of Common
Stock in lawful money of the United States of America in cash or by certified
of cashier's check or a combination of cash and certified or cashier's check
(subject to adjustment as hereinafter provided).
1. WARRANT; PURCHASE PRICE
Each Warrant shall entitle the Holder initially to purchase one share
of Common Stock of the Company and the purchase price payable upon exercise of
the warrants (the "Purchase Price") shall initially be $5.00 per share of Common
Stock. The Purchase Price and number of shares of Common Stock issuable upon
exercise of each warrant are subject to adjustment as provided in Article 6. The
shares of Common Stock issuable upon exercise of the Warrants (and/or other
shares of common stock so issuable by reason of any adjustments pursuant to
Article 6) are sometimes referred to herein as the "Warrant Shares".
2. EXERCISE, EXPIRATION DATE, REDEMPTION
2.1 The Warrants are exercisable, at the option of the Holder, in
whole or in part at any time and from time to time after issuance and on or
before the Expiration Date, upon
<PAGE>
surrender of this Warrant Certificate to the Company together with a duly
completed Notice of Exercise, in the form attached hereto as Exhibit A, and
payment of an amount equal to the Purchase Price times the number of Warrants to
be exercised. In the case of exercise of less than all the Warrants represented
by this Warrant Certificate, the Company shall cancel the Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate for the balance of such Warrants.
2.2 The term "Expiration Date" shall mean 5:00 p.m. New York time on
April 11, 2001, or if such day shall in the State of New York be a holiday or a
day on which banks are authorized to close, then 5:00 p.m. New York time the
next following day which in the State of New York is not a holiday or a day on
which banks are authorized to close.
2.3 The Company may redeem the Warrants at a price of $0.01 per
Warrant upon not less than 30 days' prior written notice if the last sale price
of the Common Stock has been at least $8.50 per share for the 20 consecutive
trading days ending on the third day prior to the date on which the notice of
redemption is given.
3. REGISTRATION AND TRANSFER ON COMPANY BOOKS
3.1 The Company shall maintain books for the registration and transfer
of the Warrants and the registration and transfer of the Warrant Shares.
3.2 Prior to due presentment for registration of transfer of this
Warrant Certificate, or the Warrant Shares, the Company may deem and treat the
registered Holder as the absolute owner thereof.
3.3 Neither this Warrant Certificate, nor the Warrants represented
hereby, may be sold, assigned or otherwise transferred voluntarily by the
Holder, other than to an Affiliate, as defined herein, of such Holder (a
"Permitted Transfer"), without the consent of the Company, such consent not to
be unreasonably withheld. The Company shall register upon its books any
Permitted Transfer of a Warrant Certificate, upon surrender of same to the
Company with a written instrument of transfer duly executed by the registered
Holder or by a duly authorized attorney. Upon any such registration of Permitted
Transfer, new Warrant Certificate(s) shall be issued to the transferees and the
surrendered Warrant certificate shall be canceled by the Company. A Warrant
Certificate may also be exchanged, at the
2
<PAGE>
option of the Holder, for new Warrant Certificates of different denominations
representing in the aggregate the number of Warrants evidenced by the Warrant
Certificate surrendered. For the purposes of this Section 3.3, the term
"Affiliate" of a person as used herein shall mean (i) any trust, beneficiary of
a trust of which such person is the sole trustee and (ii) any lineal
descendents, ancestors, spouse or former spouse(s) (as part of a marital
dissolution) (or any trust for the benefit of or a family partnership whose
partners shall be such person and/or any lineal descendents, ancestors, spouse
or former spouses (as part of a marital dissolution)) of such person.
4. RESERVATION OF SHARES
The Company covenants that it will at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of issue
upon exercise of the Warrants, such number of shares of capital stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of capital stock which shall be issuable upon
exercise of the Warrants shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof, and that upon issuance such shares shall be listed on each
national securities exchange, if any, on which the other shares of such
outstanding capital stock of the Company are then listed.
5. LOSS OR MUTILATION
Upon receipt by the Company of reasonable evidence of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company, or, in the case of mutilation, upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new Warrant Certificate representing an equal number of Warrants.
6. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES DELIVERABLE
6.1 The number of Warrant Shares purchasable upon the exercise of each
Warrant and the Purchase Price with respect to the Warrant Shares shall be
subject to adjustment as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its Common Stock payable in shares of its capital stock,
(ii) subdivide its outstanding shares
3
<PAGE>
of Common Stock through stock split or otherwise, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, or (iv) issue by reclassification its Common Stock
(including any reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation) other
securities of the Company, the number and/or nature of Warrant Shares
purchasable upon exercise of each Warrant immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Company which he would
have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this paragraph (a) shall become
effective retroactively as of the record date of such event.
(b) In case the Company shall issue rights, options or warrants or
securities convertible into Common Stock to the holders of its shares of
Common Stock generally, entitling them (for a period expiring within 45
days after the record date referred to below in this paragraph (b))
to subscribe for or purchase shares of Common Stock at a price per share
which (together with the value of the consideration, if any, payable for
such rights, options, warrants or convertible securities) is lower on the
record date referred to below than the then Market Price Per Share of such
Common Stock (as determined pursuant to Section 9.2) the number of
Warrant Shares thereafter purchasable upon the exercise of each Warrant
shall be determined by multiplying the number of Warrant Shares immediately
theretofore purchasable upon exercise of each Warrant by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on
such record date plus the number of shares which the aggregate offering
price of the total number of shares of Common Stock so offered would
purchase at the then Market Price Per Share of such Common Stock. Such
adjustment shall be made whenever such rights, options, warrants or
convertible securities are issued, and shall become effective retroactively
as of the record date for the determination of shareholders entitled to
receive such rights, options, warrants or convertible securities. In the
event such subscription price may be paid in consideration some or all of
which is in a form
4
<PAGE>
other than cash, the value of such consideration shall be determined in
good faith by the Board of Directors of the Company.
(c) In case the Company shall distribute to all holders of its shares
of Common Stock, or all holders of Common Stock shall otherwise become
entitled to receive, shares of capital stock of the Company (other than
dividends or distributions on its Common Stock referred to in paragraph (a)
above), evidences of its indebtedness or rights, options, warrants or
convertible securities providing the right to subscribe for or purchase any
shares of the Company's capital stock or evidences of its indebtedness,
then in each case the number of Warrant Shares thereafter purchasable upon
the exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon the exercise of each
Warrant, by a fraction, of which the numerator shall be the then Market
Price Per Share of the Warrant Shares (as determined pursuant to Section
9.2) on the record date mentioned below in this paragraph (c), and of which
the denominator shall be the then Market Price Per Share of the Warrant
Shares on such record date, less the then fair value (as determined by the
Board of Directors of the Company, in good faith) of the portion of the
shares of the Company's capital stock other than Common Stock, evidences
of indebtedness, or of such rights, options, warrants or convertible
securities, distributable with respect to each Warrant Share. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective retroactively as of the record date for the determination
of shareholders entitled to receive such distribution.
(d) In the event of any capital reorganization or any reclassification
of the capital stock of the Company, or in case of the consolidation or merger
of the Company with another corporation (other than a consolidation or merger in
which the outstanding shares of the Company's Common Stock are not converted
into or exchanged for other rights or interests), or in the case of any sale,
transfer or other disposition to another corporation of all or substantially all
the properties and assets of the Company, the Holder of each Warrant shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition that appropriate provisions shall be
made so that such Holder shall thereafter be entitled to purchase) the kind and
amount of
5
<PAGE>
shares of stock and other securities and property (including cash) which
the Holder would have been entitled to receive had such Warrants been
exercised immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition; and in any such case appropriate adjustments shall be made in
the application of the provisions of this Article 6 with respect to rights
and interest thereafter of the Holder of the Warrants to the end that the
provisions of this Article 6 shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of the Warrants. The provisions of this
Section 6.1(d) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
(e) Whenever the number of Warrant Shares, purchasable upon the
exercise of each Warrant is adjusted, as provided in this Section 6.1, the
Purchase Price with respect to the Warrant Shares shall be adjusted by
multiplying such Purchase Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.
6.2 In the event the Company shall declare a dividend, or make a
distribution to the holders of its Common Stock generally, whether in cash,
property or assets of any kind, including any dividend payable in stock or
securities of any other issuer owned by the Company (excluding regularly payable
cash dividends declared from time to time by the Company's Board of Directors or
any dividend or distribution referred to in Section 6.1(a) or (c) above), the
Purchase Price of each Warrant shall be reduced, without any further action by
the parties hereto, by the Per Share Value (as hereinafter defined) of the
dividend. For purposes of this Section 6.2, the "Per Share Value" of a cash
dividend or other distribution shall be the dollar amount of the distribution on
each share of Common Stock and the "Per Share Value" of any dividend or
distribution other than cash shall be equal to the fair market value of such
non-cash distribution on each share of Common Stock as determined in good faith
by the Board of Directors of the Company.
6.3 No adjustment in the number of Warrant Shares purchasable under
the Warrants, or in the Purchase Price with respect to the Warrant Shares, shall
be required unless such
6
<PAGE>
adjustment would require an increase or decrease of at least 1% in the number of
Warrant Shares issuable upon the exercise of such Warrant, or in the Purchase
Price thereof, provided, however, that any adjustments which by reason of this
Section 6.4 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All final results of adjustments to the
number of Warrant Shares and the Purchase Price thereof shall be rounded to the
nearest one thousandth of a share or the nearest cent, as the case may be.
Anything in this Section 6 to the contrary notwithstanding, the Company shall be
entitled, but shall not be required, to make such changes in the number of
Warrant Shares purchasable upon the exercise of each Warrant, or in the Purchase
Price thereof, in addition to those required by such Section, as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights, warrants or options
to purchase Common Stock, or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions of cash out
of retained earnings) or convertible or exchangeable securities hereafter made
by the Company to the holders of its Common Stock shall not result in any tax to
the holders of its Common Stock or securities convertible into Common Stock.
6.4 Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant or the Purchase Price of such Warrant Shares is
adjusted, as herein provided, the Company shall mail to the Holder, at the
address of the Holder shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chief Financial officer or
Secretary of the Company, which sets forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Purchase Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
6.5 In the event that at any time prior to the expiration of the
Warrants and prior to their exercise:
(a) the Company shall declare any distribution (other than a cash
dividend or a dividend payable in securities of the Company with respect to
the Common Stock); or
(b) the Company shall offer for subscription to the holders of the
Common Stock any additional shares of stock of any class or any other
securities convertible into Common Stock or any rights to subscribe
thereto; or
7
<PAGE>
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the Common
Stock, regardless of the effect of any such event on the outstanding number
of shares of Common Stock; or
(d) the Company shall declare a dividend, other than a dividend
payable in shares of the Company's own Common Stock; or
(e) there shall be any capital change in the Company as set forth in
Section 6.1(d); or
(f) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company (other than in connection with a
consolidation, merger, or sale of all or substantially all of its property,
assets and business as an entity);
(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to the Holder, not less than 20 days prior to
the record date, if any, in connection with such Notification Event (provided,
however, that if there is no record date, or if 20 days prior notice is
impracticable, as soon as practicable) written notice specifying the nature of
such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts indicating the effect of such action (to the
extent such effect may be known at the date of such notice) on the Purchase
Price and the kind and amount of the shares of stock or other, securities or
property deliverable upon exercise of the Warrants.
6.6 The form of Warrant Certificate need not be changed because of any
change in the Purchase Price, the number of Warrant Shares issuable upon the
exercise of a Warrant or the number of Warrants outstanding pursuant to this
Section 6, and Warrant Certificates issued before or after such change may
state the same Purchase Price, the same number of Warrants, and the same number
of Warrant Shares issuable upon exercise of Warrants as are stated in the
Warrant Certificates theretofore issued pursuant to this Agreement. The Company
may, however, at any time, in its sole discretion, make any change in the form
of Warrant Certificate that it may deem appropriate and that does not affect
the substance thereof, and any Warrant Certificates thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
8
<PAGE>
7. CONVERSION RIGHTS
7.1 In lieu of exercise of any portion of the Warrants as provided in
Section 2.1 hereof, the Warrants represented by this Warrant Certificate (or any
portion thereof) may, at the election of the Holder, be converted into the
nearest whole number of shares of Common Stock equal to: (1) the product of (a)
the number of Warrants to be so converted, (b) the number of shares of Common
Stock then issuable upon the exercise of each Warrant and (c) the excess, if
any, of (i) the Market Price Per Share (as determined pursuant to Section 9.2)
with respect to the date of conversion over (ii) the Purchase Price in effect
on the business day next preceding the date of conversion, divided by (2) the
Market Price Per Share with respect to the date of conversion.
7.2 The conversion rights provided under this Section 7 may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding. In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrants (or so much thereof as shall have been surrendered
for conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates representing the number
of shares of Common Stock to which the Holder shall be entitled as a result of
the conversion, and (ii) if the Warrant Certificate is being converted in part
only, a new certificate of like tenor and date for the balance of the
unconverted portion of the Warrant Certificate.
8. VOLUNTARY ADJUSTMENT BY THE COMPANY
The Company may, at its option, at any time during the term of the
Warrants, reduce the then current Purchase Price to any amount deemed
appropriate by the Board of Directors of the Company and/or extend the date of
the expiration of the Warrants.
9. FRACTIONAL SHARES AND WARRANTS; DETERMINATION OF MARKET PRICE
PER SHARE
9.1 Anything contained herein to the contrary notwithstanding, the
Company shall not be required to issue any fraction of a share of Common Stock
in connection with the
9
<PAGE>
exercise of Warrants. Warrants may not be exercised in such number as would
result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Common Stock unless the Holder is exercising all Warrants
then owned by the Holder. In such event, the Company shall, upon the exercise of
all of such Warrants, issue to the Holder the largest aggregate whole number of
shares of Common Stock called for thereby upon receipt of the Purchase Price for
all of such Warrants and pay a sum in cash equal to the remaining fraction of a
share of Common Stock, multiplied by its Market Price Per Share (as determined
pursuant to section 9.2 below) as of the last business day, preceding the date
on which the Warrants are presented for exercise.
9.2 As used herein, the "Market Price Per Share" with respect to any
class of series of Common Stock on any date shall mean the closing price per
share of Company's Common Stock for the trading day immediately preceding such
date. The closing price for each such day shall be the last sale price regular
way or, in case no such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case on the principal securities
exchange on which the shares of such Common Stock of the Company are listed or
admitted to trading or, if applicable, the last sale price, or in case no sale
takes place on such day, the average of the closing bid and asked prices of such
Common Stock on NASDAQ or any comparable system, or if such Common Stock is not
reported on NASDAQ, or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If such bid and asked prices are not available, then "Market Price Per
Share, shall be equal to the fair market value of such Common Stock as
determined in good faith by the Board of Directors of the Company.
10. GOVERNING LAW
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed by its officers thereunto duly authorized and its corporate seal
to be affixed hereon, as of this 17TH day of 0CTOBER, 1995.
KELLSTROM INDUSTRIES, INC.
By: /s/ ZIVI R. NEDIVI
----------------------------
Name: Zivi R. Nedivi
Title: President and Chief
Executive Officer
SEAL
Attest:
/s/ JOHN GLEASON
- ---------------------------
John Gleason
11
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to Section
2 of the Warrant Certificate accompanying this Notice of Exercise, Warrants of
the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.
________________________________
Name of Holder
________________________________
Signature
Address:
________________________________
________________________________
________________________________
12
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrants
of the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate into shares of the Common Stock of the Company
(the "Shares").
The number of Shares to be received by the undersigned shall be calculated in
accordance with the provisions of Section 7.1 of the accompanying Warrant
Certificate.
________________________________
Name of Holder
________________________________
Signature
Address:
________________________________
________________________________
________________________________
13
EXHIBIT 24.1
The Board of Directors
Kellstrom Industries, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Miami, Florida
August 13, 1996
